^A£j£g>ry 


AMERICAN  SOCIAL  PROGRESS  SERIES 

"  SOCIAL   INSURANCE  ** 

A   PROGRAM    OF    SOCIAL    REFORM 

& 

BY 

( 

HENRY   ROGERS   SEAGER 
i*  * 

PROFESSOR    OF    POLITICAL    ECONOMY 
IN   COLUMBIA   UNIVERSITY 


THE  KENNEDY  LECTURES  FOR  1910,  IN  THE  SCHOOL 

OF  PHILANTHROPY,  CONDUCTED  BY  THE  CHARITY 

ORGANIZATION  SOCIETY  OF  THE  CITY  OF 

NEW  YORK 


Hefo  forfe 
THE  MACMILLAN   COMPANY 

1910 

Ml  rights  reserved 


COPTBIGHT,   1910, 

BY  THE  MACMILLAN  COMPANY. 


Set  up  and  electrotyped.     Published  June,  1910 


MAIN  LJBRARV 


Nartoooto 

J.  8.  Gushing  Co.  —  Berwick  &  Smith  Co. 
Norwood,  Mass.,  U.S.A. 


CONTENTS 

CHAPTER  PAGE 

I.    THE  COMMON  WELFARE       ....  1 

II.     INDUSTRIAL  ACCIDENTS,  ILLNESS,  AND  PRE- 
MATURE DEATH:  PREVENTION         .        .  24 

HI.     INDUSTRIAL  ACCIDENTS,  ILLNESS,  AND  PRE- 
MATURE DEATH:   COMPENSATION     .        .  53 

IV.     UNEMPLOYMENT:   CAXJSES  AND  REMEDIES    .  84 

V.     PROVISION  FOR  OLD  AGE     ....  115 

VI.    NEXT  STEPS  IN  SOCIAL  ADVANCE  "  146 


v 

• 


•   SOCIAL  INSURANCE 

CHAPTER  I 
THE  COMMON  WELFARE 

AMONG  the  many  characteristics  which  foreign 
observers  have  ascribed  to  Americans  are 
two  about  which  there  has  been  little  difference  of 
opinion.  We  are  good-natured,  and  we  are  indi- 
vidualists. Sermons  have  been  preached  against 
our  good  nature,  so  I  need  not  dwell  upon  it.  Much 
more  important  is  our  individualism,  —  our  absorp- 
tion in  individual  interests  and  our  reluctance  to 
undertake  things  in  combination  with  our  neighbors 
or  through  the  government.  That  individualism 
is  an  American  characteristic  is  proved  by  a  number 
of  familiar  facts.  Thus,  the  phrase,  "social  re- 
form," which,  in  other  countries,  suggests  compre- 
hensive plans  of  state  action,  is  still  usually 
associated  in  the  United  States  with  the  welfare 
departments  of  private  corporations,  privately 
endowed  schools  of  philanthropy,  or  such  splendid 
examples  of  private  beneficence  as  the  Russell  Sage 


SOCIAL  INSURANCE 

Foundation.  Again,  the  cooperative  movement, 
which  has  made  such  signal  progress  in  Europe,  is 
in  its  infancy  here.  Finally,  socialism,  the  extreme 
antithesis  of  individualism,  numbers  fewer  converts 
relatively  to  the  population  in  the  United  States 
than  in  any  other  country  of  the  Western  World. 
Like  every  other  national  trait,  this  characteris- 
tic may  be  traced  to  definite  causes  in  our  history. 
If  individualism  is  not  the  normal  attribute  of  a  new 
country,1  it  isat  least  a  natural  consequence  of  the 
process  by  which  this  particular  new  oo^nt.r^  has 
grown  up.  The  population  of  the  United  States  is 
practically  all  of  foreign  origin.  Generally  speak- 
ing, only  self-centered  and  self-reliant  characters 
break  the  social  bonds  that  hold  them  at  home, 
leave  neighbors  and  friends,  and  stake  everything 
on  the  doubtful  venture  of  emigrating  to  a  new 
land.  The  twenty-seven  odd  million  immigrants 
who  have  come  to  this  country  since  it  was  dis- 
covered by  Europeans  have  thus  left^a  strong 
individualistic  impress  on  their  descendants.  Re- 
lated to  this  has  been  the  diversity  of  our  population 
elements.  As  sociologists  express  it,  the  "con- 

1  That  individualism  is  not  characteristic  of  all  new  coun- 
tries is  clearly  proved  by  the  history  of  Australia  and  New 
Zealand. 

[8] 


THE   COMMON  WELFARE 

sciousness  of  kind  "  has  been  slow  to  develop  in  our 
heterogeneous  population.  This  has  fostered  in- 
dividualism and  stood  in  the  way  of  combined 
action.  Thus  our  heredity  gives  us  a  strong  in- 
dividualistic bias.  Far  from  opposing  this  bias, 
the  natural  conditions  which  distinguish  this 
country  have  tended  further  to  emphasize  it.  The 
variety  and  abundance  of  our  resources  have  offered 
unrivaled  opportunities  for  individual  achieye- 
ment.  Dazzled  by  these,  we  have  been  absorbed  in 
a  mad  struggle  for  individual  success  and  blinded 
to  our  common  interests.  Nor  is  this  all. 

As  though  it  were  not  enough  that  heredity  and 
environment  combined  to  make  us  individualists, 
our  forefathers  wrote  their  individualistic  creed 
into  our  federal  and  state  constitutions.  All  these 
instruments  give  special  sanctity  to  the  rights  to 
liberty  and  property.  As  interpreted  by  the  courts, 
a  significance  has  been  given  to  these  constitutional 
rights  that  has  seemed  at  times  to  make  a  fetish  of 
the  merely  formal  freedom  of  the  individual.  Thus 
it  is  not  too  much  to  say  that  Americans  are  born 
individualists  in  a  country  peculiarly  favorable  to 
the  realization  of  individual  ambitions  and  under  a 
legal  system  which  discourages  and  opposes  resort 
to  any  but  individualistic  remedies  for  social  evils. 

[3] 


SOCIAL  INSURANCE 

So  long  as  this  was  a  new  country,  with  abun- 
dance of  free  land  to  attract  and  reward  the  ad- 
venturous pioneer,  little  fault  was  to  be  found  with 
this  national  trait.  To  be  self-centered  and  self- 
reliant,  to  believe  that  "that  government  is  best 
which  attempts  least,"  to  identify  freedom  with 
immunity  from  state  interference,  was  safe  and 
wholesome  for  a  nation  of  farmers.  It  fostered 
ambition,  enterprise,  and  courage,  and  these  were 
desirable  qualities.  To  them  and  to  our  wealth 
of  natural  resources  we  have  owed  our  greatness  as 
a  people.  To  some  extent  we  are  still  a  nation  of 
farmers.  For  great  sections  of  the  country  the 
simple  formulae  of  individualism,  qualified  by  a 
more  aggressive  conservation  of  natural  resources 
and  governmental  regulation  of  railroads  and 
trusts,  are  still  true  and  wise.  But  every  year 
these  sections  are  growing  less  important,  and  the 
qualifications  on  the  program  of  individualism  that 
must  be  made  to  adapt  it  even  to  their  needs, 
more  numerous. 

It  is  the  purpose  of  these  lectures  to  insist  that 
for  other  great  sectJQn^jofjdiejgountry — the  sections 
in  which  manufacturing  and  trade  have  become 
the  dominant  interests  of  the  people,  in  which 
towns  and  cities  have  grown  up,  and  in  which  the 

[4] 


THE   COMMON  WELFARE 

wage  earner  is  the  typical  American  citizen  —  the 
^simplejreed  of  individualism  is  no  longer  adequate. 
For  these  sections  we  need  not  freedom  from  gov- 
ernmental interference,  but  clear  appreciation  of 
the  conditions  that  make  for  the  common  welfare, 
as  contrasted  with  individual  success,  and  an  ag- 
gressive program  of  governmental  control  and 
regulation  to  maintain  these  conditions. 

This  view  might  be  defended  in  general  terms. 
I  might  trace  the  course  of  the  industrial  revolu- 
tion and  show  how,  with  the  introduction  and 
spread  of  capitalistic  methods  of  production,  the 
individual  wage  earner  has  become  more  and  more 
helpless  in  his  efforts  to  control  the  conditions  of  his 
employment.  I  might  sketch  the  growth  of  cities, 
and  point  out  how  the  welfare  of  city  dwellers, 
their  housing  accommodations,  the  water  and  milk 
they  drink,  and  the  food  they  eat,  are  determined 
for  them  rather  than  by  them,  and  unless  regu- 
lated by  the  common  government  will  not  be  ade- 
quately  regulated  at  all.  But  arguments  in  general 
terms  are  seldom  convincing.  What  I  intend  to 
do  rather  is  to  indicate  certain  points  atjwhich  ^ 
the  program  of  individualism  Sj3ems~to~mexpon^ 

to  outline  a  program  of  social 


reform  by  which  its  deficiencies  may  be  corrected. 

[5] 


SOCIAL  INSURANCE 

To  bring  out  some  of  the  contrasts  that  I  have 
in  mind,  let  me  state  as  fairly  as  I  may  what  the 
program  of  individualism  intends  for  the  wage 
earner.  It  looks  upon  our  complex  modern  method 
of  production  for  sale  in  the  general  market  as  a 
great  system  of  ^cooperation.  Employer,  capital- 
ist, and  wage  earner  cooperate  in  preparing  goods 
for  sale.  Buyers,  who  are  other  employers,  capi- 
talists, and  wage  earners,  cooperate  by  taking  goods 
at  the  prices  demanded  and  at  the  same  time 
offering  their  goods  for  exchange  in  the  common 
market.  -Competitioji^  if  free  and  unhampered, 
tends  to  adjust  the  terms  on  which  workmen  are 
hired,  capital  is  borrowed,  and  goods  are  sold,  so 
that  each  is  rated  at  the  figure  to  which  it  is  com- 
petitively entitled.  Under  this  arrangement,  as 
individualists  conceive  of  it,  the  employer  needs 
the  workman  as  much  as  the  workman  needs  the 
employer.  There  is  competitive  bidding  on  both 
sides.  In  times  of  abounding  prosperity  like  the 
present  there  are  more  jobs  seeking  men  than 
men  seeking  jobs.  Wages  tend  to  rise.  On  the 
whole,  abounding  prosperity  has  been  the  rule  in 
the  United  States.  If  wages  have  not  risen  as 
much  as  we  could  wish,  it  is  because  immigration 
and  the  native  growth  of  population  have  re- 

[6] 


THE   COMMON  WELFARE 

sponded  so  fully  to  expanding  industry.     There  is 
no  inherent  tendency  in  the  competitive  system  to 
hold  wage  earners  down,  no  "iron  law  of  wages." 
Wages   are  determined  by  the  relation  between^ 
supply    and    demand.     Expanding    industry    fur- 
nishes the  demand.     It  rests  with  wage  earners 
themselves  to    control    the    supply.      Their    well" 
wishers  do  wrong  to  seek  to  interfere  with  the    j •    \ 
"natural  laws  of  trade."     Their  efforts  should  be     „ 

A  ju 

directed  rather  to  inducing  wage  earners  to  greater      — 
prudence   in   their   marriage   relations   and   more  y. 
forethought  in  providing  by  saving  for  their  future 
needs.     By   means    of   postponed    marriages   and 
smaller  families  the  supply  of  workers  may  be  kept 
down  so  that  wages  will  advance  to  ever  higher 
levels.     By   means   of  saving,  wage  earners  may 
make  ever    larger  contributions  to  the  capital  of 
the  community,  which  is  one  of    the    conditions 
creating  the  demand  for  labor. 

It  is  along  these  lines  that  individualists  would 
direct  the  car  of  progress.  And  they  see  no  reason 
for  assigning  any  limit  to  the  resulting  improve- 
ment in  the  condition  of  the  world's  workers. 
Wages  may  become  higher  and  higher.  Out  of 
their  larger  earnings  wage  earners  may  save  and 
contribute  an  ever  larger  proportion  to  the  capital 

[7] 


SOCIAL  INSURANCE 

of  the  community.  If  the  corporate  form  of  indus- 
trial organization  continues  to  grow  at  the  expense 
of  other  forms,  the  time  may  come  when  the  dis- 
tinction between  wage  earners  and  capitalists  will 
entirely  disappear.  All  those  engaged  in  gainful 
occupations  may  be  employees  of  corporations. 
All  may  at  the  same  time,  either  directly  or 
through  their  savings  funds,  be  stockholders  in 
these  same  corporations.  Something  like  this  is  the 
millennium  to  which  individualists  look  forward. 

As  a  picture  of  the  future,  this  millennium  com- 
pares favorably  with  other  forecasts.  The  fault 
that  I  have  to  find  with  it  is  not  that  it  presents 
an  impossible  ideal,  but  that  it  ignores  certain 
tendencies  which,  unless  corrected,  render  its  reali- 
zation impossible.  The  tendencies  I  r^fer  to  may 
be  summed  up  in  two  statements.  ""'First,  there 
is  little  or  no  evidence  that  wage  earners  are  be-, 
coming  more  provident  in  their  habits.  Second,  ' 
their  failure  to  make  provision  for  the  future  is 
a  cause  serving  constantly  to  recruit  the  mass  of 
unorganized,  unskilled  workers  whose  lack  of 
standards  and  unregulated  competition  oppose  the 
progress  of  wage  earners  all  along  the  line. 

Are  the  mass  of  wage  earners  becoming  more 
provident  and  forethoughtful  in  their  habits?     My 

[8] 


THE   COMMON  WELFARE 

contention  is  that  they  are  not,  and  that  Changing 
industrial  conditions  are  making  saving,  more  diffi- 
cult rather  than  easier.  In  the  past  it  is  clear  that 
the  principal  motives  to  saving  in  the  United  States 
have  been  desire  to  own  land,  which  has  appealed 
to  the  agricultural  population,  and  desire  to  own 
homes  and  the  tools  and  implements  of  production, 
which  has  appealed  to  town  dwellers.  The  desire 
to  own  land  is  still  a  strong  incentive  to  saving 
in  some  sections  of  the  country.  Where  land  is 
abundant  and  cheap,  the  farm  hand  has  constantly 
before  his  mind  the  possibility  of  becoming  a 
farmer.  To  attain  this  he  will  make  great  sacrifices. 
Having  acquired  land,  .equally  strong  motives  to 
further  accumulation,  to  buy  agricultural  tools, 
stock,  and  ever  more  land,  present  themselves. 
Thus  the  wage  earner  is  transformed  into  the 
capitalist.  ,  This  process  has  been  repeated  over 
and  over  again  in  the  United  States,  and  we  have 
our  5,000,000  or  more  independent  farmers  as  a 
result.  Unfortunately,  the  sections  in  which  land 
is  abundant  and  cheap  are  narrowing  every  year, 
and  signs  are  not  lacking  that  we  are  coming  to 
have  a  permanent  class  of  agricultural  wage  earners 
comparable  at  many  points  with  the  wage  earners 
in  cities. 

[9] 


SOCIAL  INSURANCE 

The  change  for  the  worse  is  even  more  con- 
spicuous as  regards  city  dwellers.  However  it 
may  be  in  small  manufacturing  towns,  it  is  clearly 
not  possible  nor  desirable  for  the  wage  earners  in 
large  cities  to  own  their  dwellings.  They  have 
become  tenants,  and  the  strongest  of  all  motives 
for  saving  has  passed  for  all  time  out  of  their  lives. 
The  motive  for  saving,  to  acquire  the  tools  and 
implements  of  production,  is  even  more  remote 
from  the  calculations  of  the  present-day  workman. 
The  machines,  factories,  railroads,  and  steam- 
ships of  modern  industry  are  far  too  costly  to 
be  owned  by  the  men  who  operate  them.  They 
of  necessity  are  supplied  by  capitalist-employers 
who  look  to  their  employees  only  for  the  labor  force 
necessary  to  make  them  efficient. 

And  the  conditions  of  modern  industry  have 
failed  to  supply  motives  for  saving  sufficiently 
strong  to  take  the  place  of  these  that  are  gone. 
It  is  true  that  saving  is  still  necessary  to  provide 
for  the  rainy  day,  for  loss  of  earning  power  due 
to  illness  or  accident  or  old  age,  but  against  these 
needs  is  the  insistent  demand  of  the  present  for 
better  food,  for  better  living  conditions,  for  educa- 
tional opportunities  for  children.  This  demand 
is  not  fixed  and  stationary.  It  is  always  expand- 

[10] 


THE   COMMON  WELFARE 

ing.  In  my  profession,  it  is  a  common  pastime  to 
attempt  to  compare  the  cost  of  living  of  the  coun- 
try college  k  professor  with  that  of  his  colleague  in 
the  city  university.  To  speculate,  for  example, 
,  whether  $3000  a  year  at  Amherst  will  go  as  far  as 
$5000  a  year  at  Columbia.  Such  comparisons 
are  quite  idle.  One  consequence  of  our  living  to- 
gether in  cities  and  daily  observing  the  habits 
of  those  better  off  than  we  are  is  that  we  are 
under  constant  pressure  to  advance  our  standards. 
This  pressure  affects  the  wage  earner  quite  as  much 
as  it  does  the  college  professor.  Both,  when  con- 
fronted with  the  problem  of  supporting  a  family 
in  a  modern  city,  find  the  cost  of  living,  as  Mark 
Twain  has  said,  "a  little  more  than  you've  got." 
Against  this  tendency  of  current  expenses  to  press 
against  income,  fear  for  the  future  is  all  too  weak 
a  check.  The  average  individual  is  an  optimist. 
He  does  not  expect  to  be  out  of  employment, 
to  be  ill,  to  be  injured  in  his  work,  or  even  to  grow 
too  old  to  work.  Desire  to  provide  against  these 
contingencies  is  feeble  in  comparison  with  the 
desire  to  live  better  in  the  present.  That  this  is 
true  is  admitted  by  nearly  every  one  who  has  at- 
tempted to  make  a  study  of  the  expenditures  of 
wage  earners  at  close  range.  Two  such  studies 

[in 


SOCIAL  INSURANCE 

have  recently  been  made  in  New  York  City,  and 
both  bear  out  my  contention.  The  agencies  that 
are  most  constantly  resorted  to  by  wage  earners  V 
who  save  for  future  needs  are  industrial  insurance 
companies  and  savings  banks.  Mrs.  More,  who 
collected  evidence  in  regard  to  the  budgets  of 
200  representative  wage-earning  families  in  New 
York,  reports  that  174  out  of  the  200  families,  or 
87  per  cent,  carried  some  insurance.1  This  is  im- 
pressive, but  she  goes  on  to  explain  that:  "The 
insurance  money  invariably  goes  to  meet  the  ex- 
penses of  the  funeral  or  of  the  last  illness.  The 
larger  the  policy,  the  finer  the  funeral."  That  is, 
industrial  insurance  among  the  families  she  studied 
was,  as  a  rule,  merely  another  name  for  burial  in- 
surance. Dread  of  the  pauper's  grave  is  a  motive 
strong  enough  to  induce  saving  among  nearly 
all  wage  earners,  but  insurance  is  rarely  resorted 
to  for  any  other  purpose.  Mr.  Chapin,  who 
studied  the  expenditures  of  318  New  York  fami- 
lies, arrived  at  similar  conclusions.2  Only  18 

1  Wage  Earners'  Budgets:  A  Study  of  Standards  and  Cost 
of  Living  in  New  York  City.     By  Louise  Bolard  More.     Henry 
Holt  and  Company.     New  York,  1907.    pp.  42^3. 

2  The  Standard  of  Living  Among  Workingmen's  Families 
in  New  York    City.     By  Robert  Coit  Chapin,  Ph.D.     New 
York,  Russell  Sage  Foundation  Publication,  1909.     pp.  191- 
197. 

[12] 


THE   COMMON  WELFARE 

per   cent  of   his  families  carried   policies   as  high 
as  $500. 

It  is  less  easy  to  determine  the  amounts  saved 
by  wage  earners  through  the  savings  banks.  Mrs.  /j\ 
More  reports  that  less  than  one  fourth  of  her 
families  saved  anything,  while  more  than  one 
fourth  fell  behind.  About  one  half  were  just 
able  to  make  both  ends  meet.  Mr.  Chapin  found 
that  about  one  third  of  his  families  reported  savings, 
but  it  is  significant  that  such  saving  was  twice  as 
common  among  the  Jewish  and  Italian  families 
which  he  studied  as  among  the  more  completely 
assimilated  Teutonic  and  American  families. 

The  impression  conveyed  by  these  special  in- 
vestigations, that  is,  that  saving  through  the  in- 
dustrial insurance  companies  is  chiefly  for  the 
purpose  of  meeting  funeral  expenses,  andJiai 
saving  through  the  savings  banks  is  exceptional 
rather  than  the  rule  among  American  wage  earners, 
is  confirmed  in  a  number  of  different  ways.  Settle- 
ment workers  who  are  trying  to  inculcate  habits 
of  thrift  by  running  branches  of  the  Penny  Provi- 
dent Fund  report  that  few  depositors  are  educated 
to  the  point  of  starting  savings-bank  accounts. 
Administrators  of  charitable  relief  societies  agree 
that  wage-earning  families  whose  savings  are  suffi- 

[13] 


SOCIAL  INSURANCE 

cient  to  tide  them  over  prolonged  periods  of  un- 
employment are  quite  exceptional.  Finally,  an 
observer  of  the  habits  and  standards  of  wage 
earners  with  unequaled  opportunities  for  forming 
an  opinion,  John  Mitchell,  affirms  that  "the 
average  wage  earner  [of  to-day]  has  made  up  his  ' 
mind  that  he  must  always  remain  a  wage  earner."* 

Industrial  insurance  companies  and  savings 
banks  are,  of  course,  not  the  only  agencies  for 
caring  for  the  savings  of  wage  earners./  Trade- 
union  benefit  funds,  friendly  and  fraternal  insur- 
ance societies,  and  benefit  departments  of  corpo- 
rations also  draw  together  their  accumulations. 
In  the  aggregate  the  savings  made  are  large,  but 
the  fact  remains  that  the  wage  earners  who  save 
are  the  exception  rather  than  the  rule.  The  great 
majority  find  their  incomes  all  too  small  to  meet 
their  present  needs  and  the  needs  of  their  families. 
The  cost  of  living  is  a  little  more  than  they've  got. 

The  consequence  is  that  when  really  serious 
emergencies  come,  few  wage  earners'  families  are 
prepared  to  meet  them.  If  this  resulted  merely 
in  unhappiness  and  suffering  for  the  families  af- 
fected, we  might  content  ourselves  with  present 
methods  of  trying  to  relieve  distress  as  it  arises. 
Industrial  accidents,  illness,  premature  death, 

[14] 


THE   COMMON  WELFARE 

unemployment,  and  old  age,  the  most  serious  con- 
tingencies to  which  wage  earners  are  exposed, 
would  excite  our  pity  but  need  not  excite  our  alarm. 
But  these  evils  do  not  confine  themselves  to  the 
families  who  suffer  directly  from  them.  It  is 
through  them  —  and  this  is  my  second  point  — 
thatjthe  army  of  unskilled  and  unorganized  casual 
labor  is  constantly  recruited.  How  this  comes 
about  is  only  too  familiar  to  workers  among  the 
poor.  Consider  first  the  consequences  of  fatal 
accidents.  In  the  United  States  there  are  probably 
not  less  than  30,000  such  accidents  every  year. 
Assuming  that  in  one  third  of  these  cases  either 
no  family  is  left  or  adequate  provision  is  made  for 
the  family,  we  have  20,000  families  reduced  to 
destitution  by  such  accidents.  This  does  not  mean 
that  that  number  of  families  are  rendered  de- 
pendent. Many  of  them,  perhaps  one  half,  face 
the  situation  bravely.  But  more  than  courage  is 
needed  to  enable  a  widow  left  without  resources 
to  bring  up  her  children  as  they  would  have  been 
brought  up  had  the  father  lived.  To  assume  that 
one  half  of  those  who  avoid  dependency  do  so 
without  falling  into  a  lower  class  in  the  industrial 
scale  than  that  to  which  they  were  born  is  to  be 
highly  optimistic.  For  the  other  half  and  for  the 

[IS] 


SOCIAL  INSURANCE 

families  that  become  social  dependents,  the  father's 
death  is  a  calamity  from  which  the  family  never 
entirely  recovers.  In  consequence  of  these  acci- 
dents some  15,000  widows  and  some  45,000  chil- 
dren are  added  every  year  to  that  group  of  unfor- 
tunates who  are  forced  by  necessity  to  accustom 
themselves  to  a  hand-to-mouth  existence.  This 
means  competition  for  work  in  employments  where 
competition  is  keenest  and  wages  are  lowest.  It 
means  that  the  children  grow  up  without  any 
standard  of  living  or  training  for  earning  a  living. 
If,  instead  of  resulting  fatally,  the  accident  merely 
incapacitates  the  wage  earner  for  continuing  work 
in  his  trade,  the  consequences  are  almost  as  bad. 
In  this  event  he,  too,  may  be  forced  to  seek  work 
in  those  unskilled  employments  where  earnings  are 
lowest.  Some  wage  earners  meet  this  situation 
with  no  loss  in  independence  and  self-respect. 
Many  more  sink  under  their  misfortunes  and  in 
time  adopt  the  standards  —  or  lack  of  standards 
—  of  the  casual  laborers  with  whom  they  have  to 
compete.  When  we  consider  the  large  number  of 
accidents  that  result  in  permanent  disability,  we 
must  recognize  that  the  annual  quota  that  they  con- 
tribute to  the  army  of  the  standardless  lowest  class, 
is  as  large,  if  not  larger,  than  the  quota  due  to  fatal 

[16] 


THE   COMMON  WELFARE 

accidents.  In  the  aggregate,  industrial  accidents 
in  the  United  States  cause  a  lowering  of  stand- 
ards of  living  for  probably  not  less  than  100,000 
persons  every  year. 

Much  more  serious  than  accidents  in  its  effect 
on  standards  of  living  is  illnggs.  A  careful  esti- 
mate indicates  that  in  the  United  States  not  less 
than  jJjOOOjfppp  persons  are  seriously  ill  all  the 
time.  Of  these  3,000,000  persons  about  900,000 
are  males  fifteen  years  of  age  and  over.  Making 
the  moderate  e^tin^^ 

wage  earners  with  families,  we  get  some  idea  of  the 
part  that  illness  plays  in  recruiting  the  army  of  the 
disheartened  and  ineffective.  If  industrial  accidents 
lower  the  standards  of  living  of  100,000  persons 
in  the  United  States  every  year,  it  is  s 


that  illness  depresses  the  lot  of  more  than  200,000. 
It  would  be  impossible  to  estimate  even  roughly 
the  number  that  owe  their  presence  in  the  army  of 
the  standardless  lowest  class  to  unemployment  and 
old  age.  That  they  run  to  the  tens  of  thousands 
no  one  familiar  with  the  facts  will  be  apt  to  deny. 
In  the  aggregate,  I  have  no^^doubt  _  that  in  the 
United  States  every  year  fully  500,000  persons 
have  their  chance  of  living  independent  and  self- 
respecting  lives  lessened  by  the  five  great  misfor- 

[17] 


SOCIAL  INSURANCE 

tunes  to  which  wage  earners  are  exposed,  —  accn 
dents,  illness,  premature  death,  unemployment, 
and  old  age. 

These  500,000  persons,  or  many  of  them,  are 
the  recruits  that  prevent  the  army  of  standardless 
workers  from  growing  smaller  in  this  land  of  op- 
portunity. And  the  presence  of  this  army  seems 
to  me  to  constitute  an  insurmountable  obstacle 
to  the  realization  of  the  individualist's  millennium. 
Skilled  workers,  by  developing  standards  that 
they  adhere  to  in  good  times  and  in  bad  and  by 
organization,  are  able  to  advance  their  wages. 
It  is  of  them  that  we  usually  think  when  we  say 
that  wages  are  rising.  Unskilled  and  unorganized 
workers  show  no  such  capacity.  They  are  at  the 
mercy  of  the  law  of  supply  and  demand.  When 
demand  for  labor  is  active,  as  at  present,  more  of 
them  find  work,  and  their  earnings  are  higher  than 
in  periods  of  depression.  But  inveterate  habit 
leads  them  to  expand  their  expenditures  as  their 
earnings  increase.  They  always  live  from  hand  to 
mouth.  From  their  ranks  employers  can  always 
recruit  their  labor  force  when  those  a  little  higher  up 
in  the  labor  scale  strike  to  improve  their  condition. 
Unemployment  finds  them  without  savings,  and  soon 
reduces  them  to  the  position  of  social  dependents. 

[18] 


THE  COMMON  WELFARE 

It  is  these  facts  that  seem  to  me  to  make  the 
program  of  individualism  little  better  than  a_pro- 
gram  qf_jiespair.  By  relying  upon  it  we  have 
made  little  real  progress  toward  exterminating 
poverty.  So  far  as  I  can  see,  we  can  hope  by  its 
means  to  make  little  real  progress  in  the  future. 
If  we  accept  it,  we  must  either  blind  our  eyes  to  the 
facts  about  us,  or  else  follow  the  early  English 
economists  in  looking  upon  subsistence  wages  for 
the  lowest  grade  of  laborers  as  a  part  of  the  order  of 
nature,  and  finding  our  consolation  in  the  increased 
number  and  the  increased  comfort  of  the  higher 
groups  of  wage  earners  and  of  the  propertied  class. 

I,  for  one,  am  unwilling  to  accept  either  alter- 
native.    I  believe  that  we  shall  devise  means  for 
exterminating  poverty  as  we  have  devised  means 
for  exterminating  other  evils.     The  failure  of  yflg^x  > 
earners  to  provide,  each  for  himself,  against  the 
contingencies   that  I   have   specified  —  accidents,     . 
illness,  premature  death,  unemployment,  and  old    e  ov. 
age — is  to  my  mind  merely  proof  that  collective 
remedies  must  be  found  and  applied  to  these  evils. 
The  program  of  social  reform,  which  is  explained  in 
detail  in  the  chapters  which  follow,  deals  mainly 
with  these  collective  remedies.     In  brief  outline, 
it    consists    in    protecting    wage-earning    families       jr 

" 


SOCIAL  INSURANCE 

which  have  developed  standards  of  living  from  los- 
ing them,  and  in  helping  wage-earning  families 
without  standards  to  gain  them.  The  first  end  is 
to  be  accomplished  by  making  obligatory  for  wage 
earners  exposed  to  industrial  accidents,  illness, 
premature  death,  unemployment,  and  old  age,  ade- 
quate plans  of  insurance  against  these  evils.  The 
second,  by  withdrawing  from  competitive  indus- 
tries the  lowest  grade  of  workers,  the  tramps  and 
casuals,  and  giving  them  the  benefit  of  industrial 
training  in  graded  farm  and  industrial  colonies, 
from  which  they  shall  be  graduated  only  as  they 
prove  their  ability  to  be  independent  and  self-sup- 
porting. 

I  can  hardly  ask  you  to  accept  this  program  until 
I  have  explained  and  defended  it  in  detail.  I  do, 
however,  ask  you  to  approach  it  with  open  minds, 
and  that  you  may  do  so  I  feel  that  I  must  here  con- 
sider a  general  objection  that  is  always  urged  against 
proposals  of  this  kind.  The  mere  suggestion  that 
collective  provision  for  future  needs  be  substituted 
for  individual  provision  seems  to  many  thoughtful 
persons  to  be  fraught  with  danger.  Experience 
has  taught  them  that  in  their  efforts  to  improve 
the  condition  of  the  poor  they  must  be  con- 
stantly on  their  guard  against  pauperizing  those 

[20] 


THE   COMMON  WELFARE 

they  are  trying  to  help.  Giving  people  things  that 
they  ought  to  work  to  get  is  a  form  of  charity  that 
they  justly  regard  with  suspicion.  To  such  persons 
the  same  reasons  that  have  made  "mere  relief" 
a  byword  among  intelligent  social  workers  may 
seem  to  apply  to  plans  for  substituting  collective 
provision  for  the  future  for  individual  thrift  and 
forethought.  Is  it  wise  or  safe,  they  ask,  to  aban- 
don present  efforts  to  induce  wage  earners  to  pro- 
vide voluntarily  for  their  future  needs  and  to  make 
such  provision  on  their  part  obligatory?  Will  not 
this  tend  to  make  them  even  less  provident  and 
less  independent  than  they  now  are  ?  The  answer 
to  these  questions  seems  to  me  to  turn  upon  the 
sort  of  future  needs  that  it  is  proposed  to  provide 
against.  If  the  need  is  one  that  the  wage  earner 
clearly  foresees  as  certain  to  arise,  then  I  should  be 
the  last  person  to  wish  to  relieve  him  of  responsibility 
for  meeting  it.  If,  for  example,  we  were  discussing 
means  of  helping  wage  earners  to  pay  their  rent,  I 
should  say  the  only  safe  means  are  measures  de- 
signed to  increase  their  energy,  ambition,  and 
efficiency.  Only  in  extreme  cases  should  a  need 
of  this  sort  be  met  by  outside  help.  But  the  future 
needs  we  are  considering  are  not  of  this  sort. 
Many  wage  earners  go  through  life  without  being 

[21] 


SOCIAL  INSURANCE 

the  victims  of  industrial  accidents,  without  serious 
illness,  never  lacking  for  work,  and  not  living  long 
enough  to  become  superannuated.  These  are  all 
risks  to  which  wage  earners  are  exposed,  not  cer- 
tain needs  which  they  can  clearly  foresee.  The 
average  wage  earner  does  not  believe  that  he  will 
be  overtaken  by  any  of  these  evils.  He  is  an 
optimist.  He  believes  in  his  luck.  It  is  easy  to 
make  him  see  that  collective  provision  for  these 
needs  is  desirable,  because  he  knows  that  others 
are  unlucky.  It  is  not  easy  to  convince  him  that 
he  personally  should  insure  himself  against  them, 
because  he  thinks  that  he  personally  is  immune. 
For  contingencies  of  this  sort  to  which  all  are 
liable,  but  which  many  escape,  collective  provision 
seems  to  me  not  only  desirable  but  necessary.  So 
long  as  we  do  not  interfere  with  the  individual's 
personal  responsibility  for  meeting  the  needs  which 
he  knows  he  will  experience,  —  needs  for  food, 
clothing,  shelter,  etc.,  —  making  collective  pro- 
vision against  the  risks  to  which  he  is  exposed 
should  not  undermine  at  all  his  spirit  of  independ- 
ence and  self-help.  On  the  contrary,  by  increas- 
ing his  sense  of  security,  such  provision  should 
strengthen  the  motives  that  he  has  for  saving.  For 
it  is  not  true  that  those  who  are  most  prone  to  save 

[22] 


THE  COMMON  WELFARE 

for  future  needs  are  those  whose  needs  are  most 
urgent.  No  class  in  the  community  is  so  improvi- 
dent as  vagrants  who  never  feel  sure  of  to-morrow's 
dinner.  No  class  is  more  provident  than  the  self- 
made  millionaires  whose  provision  for  future  re- 
quirements already  exceeds  the  dreams  of  avarice. 
As  security  of  property  is  the  indispensable  condi- 
tion to  the  accumulation  of  capital  in  a  community,  j  / 
so,  I  believe,  security  of  income  is  indispensable  to 
developing  among  wage  earners  the  habit  of  look- 
ing ahead  and  making  provision  for  those  future 
needs  that  can  certainly  be  foreseen.  One  justifi- 
cation of  the  program  of  social  reform  that  I  advo- 
cate is  that  it  will  foster  providence  and  forethought 
by  insuring  wage  earners  against  those  interrup- 
tions to  the  steady  flow  of  their  incomes  which  now 
so  frequently  occur.  The  program  may  go  too 
far  or  it  may  not  go  far  enough,  but  it  certainly 
is  not  open  to  the  objection  which  we  apply  to 
indiscriminate  relief.  It  still  leaves  the  indi- 
vidual the  arbiter  of  his  own  destiny  in  the  all-im- 
portant business  of  earning  a  living.  And  it  does 
not  supersede  but  only  supplements  those  other 
efforts  that  we  must  continue  to  put  forth  to 
strengthen  and  elevate  individual  standards  of 
living  and  standards  of  efficiency. 

[23] 


CHAPTER  II 

INDUSTRIAL  ACCIDENTS,  ILLNESS,  AND 
PREMATURE  DEATH:   PREVENTION 

ANY  analysis  of  the  causes  of  human  misery 
must  give  an  important  place  to  the  evils  to 
be  discussed  in  this  chapter,  —  industrial  accidents, 
illness,  and  premature  death.  Together  they  go 
far  to  account  for  the  persistence  of  poverty  and 
dependency  in  a  country  so  fortunately  situated 
as  the  United  States.  If  they  could  be  eliminated, 
or  their  harsh  consequences  softened,  rapid  prog- 
ress might  be  made  in  that  reduction  of  poverty 
which  we  all  have  at  heart.  Here  I  shall  discuss 
the  extent  of  these  evils  in  the  United  States,  and 
the  measures  that  may  be  taken  to  prevent  their 
occurrence.  In  the  next  chapter  I  shall  consider 
methods  of  safeguarding  wage  earners  against 
the  losses  which  they  entail. 

Fourth  of  July  orators  are  fond  of  calling  at- 
tention to  the  different  fields  in  which  these  United 
States  beat  the  world.  There  is  one  field,  however, 
which  in  our  expansive  and  self-congratulatory 

[24] 


INDUSTRIAL  ACCIDENTS 

moods  it  is  better  for  us  to  forget.     TheJUmted 
States  shows  every  year  a  larger  proportion  of  \ 
industrial  accidents  on  its  railroads  and  in  its  mine; 
and  factories  than  any  other  civilized  land. 

According  to  a  recent  comparison,  we  kill  nearb 
three  times  and  injure  more  than  five  times  a 
many  railroad  employees,  in  every  thousand  em 
ployed,  as  Great  Britain;  we  kill  two  and  on- 
half  times  and  injure  five  times  as  many  as  Ger 
many,  and  we  kill  more  than  three  and  injur 
nearly  nine  times  as  many  as  Austria-Hungary. 
The  showing  made  by  our  mining  industries  i 
almost  as  bad.  To  refer  only  to  coal  mines,  i  v 
the  five  years,  1902-1906,  three  and  one  thir 
employees  in  every  thousand  were  killed  on  th 
average  each  year  in  the  United  States,  as  con: 
pared  with  two  in  Prussia  (1900-1904),  one  an 
one  quarter  in  Great  Britain,  and  one  in  Belgium 
That  the  showing  made  by  our  mills  and  factoric 
is  equally  unfavorable,  no  well-informed  perso 
will  deny.  The  very  reason  which  makes  it  in 
possible  to  prove  this  in  figures  -  -  that  is,  tl 
absence  of  trustworthy  accident  statistics  f c  . 

1  The  New  Encyclopedia  of  Social  Reform,  p.  7. 
'2Coal-Mine    Accidents:     Their    Causes    and     Prevention. 
U.  S.  Geological  Survey.  1907. 

[25] 

^5.  JL_ 


SOCIAL  INSURAN< 

the  United  States  —  is  indirect  evidence  of  our 
backwardness  in  the  field  of  accident  prevention. 
Basing  a  judgment  on  such  comparative  data  as 
are  available,  I  feel  safe  in  asserting  that,  as  regards 
occupations  generally,  accidents  are  nearly  twice 
as  common  in  the  United  States  in  proportion  to 
the  number  employed  as  they  are  in  the  United 
Kingdom  and  Germany,  and  that,  as  regards  the 
railroads,  they  are  nearly  three  times  as  common. 
Just  what  this  means  in  loss  of  life  and  limb,  in 
suffering,  poverty,  and  dependency,  it  is  impossible 
to  state  with  any  degree  of  accuracy.  According 
to  the  mortality  statistics  for  1908,  there  were 
in  that  year  44,089  deaths  from  accident  in  the 
registration  area  of  the  United  States,  of  which 
19,287  befell  gainfully  employed  men  and  boys, 
and  683,  gainfully  employed  women  and  girls. 
All  of  the  accidental  deaths,  even  of  the  gainfully 
employed,  were  of  course  not  due  to  industrial 
accidents,  but  it  does  not  seem  unreasonable  to 
assume  that  three  fourths  of  them  were.  Remem- 
bering that  the  registration  area  in  1908  embraced 
only  one  half  of  the  population  of  the  country, 
we  may  thus  conclude  that  the  fatalities  from  in- 
dustrial accidents  in  that  year  aggregated  about 
30,000. 

[26] 


INDUSTRIAL  ACCIDENTS 

That  this  total  is  not  excessive  is  indicated  by 
the  fact  that  the  annual  death  toll  which  our 
railroads  and  coal  mines  alone  levy  upon  those 
they  employ  exceeds  5000,1  although  the  employees 
in  these  industries  constitute  less  than  one  tenth 
of  the  gainfully  employed  men  and  boys  of  the 
country. 

Any  estimate  of  the  numberLof  non-fatal  acci- 
dents in  the  United  States  must  be  accepted  as  a 
pure  guess.  In  1906,  according  to  figures  fur- 
nished by  the  United  States  Geological  Survey, 
our  coal  mines  injured  two  and  one  half  times  as 
many  men  as  they  killed.  There  are  other  occu- 
pations, as  that  of  linemen  repairing  wires  carrying 
high-tension  currents,  in  which  men  are  seldom 
injured  by  accidents;  they  are  almost  always  killed. 
On  the  other  hand,  on  the  railroads  last  year  more 
than  twenty  times  as  many  men  were  injured  as 
were  killed.  Other  industries,  like  textile  mills, 

1  During  the  ten  years  ending  June  30,  1909,  the  average 
annual  number  of  fatal  accidents  to  railroad  employees  was 
3307;  during  the  three  years,  1904  to  1906,  the  average  num- 
ber of  coal  miners  killed  wr.s  2052.  The  number  of  coal 
miners  killed  in  1908  was  probably  a  good  deal  larger  than  this 
average,  since  1250  were  killed  in  Pennsylvania  alone,  in  that 
year.  With  the  terrible  Cherry  Hill  disaster  to  its  credit,  there 
can  be  little  doubt  that  1909  established  a  new  high  record, 
-b  r?h  the  exact  figures  are  not  yet  available. 

[27] 


SOCIAL  INSURANCE 

would  show  many  injured,  but  few  if  any  killed,  over 
a  long  period  of  years.  Between  these  limits  the 
fancy  of  the  imaginative  statistician  may  play  at 
will.  Mr.  F.  L.  Hoffman,  an  acknowledged  au- 
thority in  this  field,  estimated  the  number  of  non- 
.  fatal  accidents  in  the  United  States  in  1908  at 
V  ^OOOjOOO.1  Professor  R.  P.  Falkner,  equally  quali- 
fied to  speak  authoritatively  on  a  statistical  ques- 
tion, considers  an  estimate  of  even  500,000  "over- 
drawn."2 What  neither  he,  nor  Mr.  Hoffman, 
nor  any  other  student  of  the  subject,  will  deny  is 
that  the  number  of  non-fatal  as  of  fatal  accidents 
in  the  United  States  is  inexcusably,  criminally 
large,  and  that  fully  half  the  accidents  that  now 
occur  could  be  avoided. 

As  there  is  no  difference  of  opinion  in  regard  to 
the  possibility  of  reducing  the  number  of  indus- 
trial accidents  in  the  United  States,  so  there  is 

(\        •*~.-..»., •„....      ,M      .-..»-  ' 

little  as  to  the  methods  which  should  be  adopted 

to  this  end.     The  principal  changes  in  our  present 

/policy   which   should    be  made   are  three:    First,  < 

the  law  should  require  that  industrial  accidents 
i*l»«*S 

1  Bulletin  of  the  U.  S.  Bureau  of  Labor,  No.  78,  September, 
1908. 

2  Proceedings  of  the  Ninth  Annual  Meeting  of  the  National 
Civic  Federation,  December  14  and  15,  1908.     p.  156. 

[28] 


INDUSTRIAL  ACCIDENTS 

in  all  occupations  be  regularly  reported  to  some 
public  authority  which  shall  make  it  its  business 
to  study  the  causes  of  accidents,  and  to  devise 
means  of  preventing  them.  Second,  safety  and 
sanitary  regulations,  recommended  by  this  public 
authority,  should  be  drawn  up  and  rigidly  enforced 
by  means  of  regular  inspections.  Third,  some 
plan  of  accident  indemnity  should  be  devised  which 
shall  make  it  overwhelmingly  to  the  financial  ad- 
vantage  of  employers  to  reduce  to  the  narrowest 
limits  the  number  of  accidents  that  befall  their 
employees. 

Reference  has  already  been  made  to  the  inade- 
quacy of  our  information  in  regard  to  accidents. 
Even  in  New  York,  which  is  now  fairly  successful 
in  securing  reports  in  regard  to  factory  accidents, 
no  accident  reports  whatever  are  required  in  con- 
nection with  building  operations.  To  get  infor- 
mation in  regard  to  accidents  in  the  building  trades, 
the  investigator  must  have  recourse  to  the  rec- 
ords of  the  private  accident  insurance  companies. 
Thus,  the  first  step  toward  wise  regulation  — 
information  in  regard  to  accidents,  their  causes, 
etc.  —  has  yet  to  be  taken  in  the  leading  state  in 
the  Union,  in  this  notoriously  dangerous  industry! 
And  New  York  is  not  behind  the  rest  of  the  country 

[29] 


SOCIAL  INSURANCE 

in  this  field.  On  the  whole,  she  is  well  in  the  van  of 
progress,  —  but  a  progress  which  has  only  just 
begun. 

XAs  regards jsaiet^and^  sanitary  regulations  and 
inspection,  the  United  States  is  equally  backward. 
That  the  number  of  accidents  can  be  greatly  re- 
duced by  regulation  and  inspection  has  been 
proved  over  and  over  again.  Thus,  as  regards  the 
railroads,  significant  results  have  followed  the 
requirement  by  federal  law  that  automatic  couplers 
be  used.  In  1893,  when  few  automatic  couplers 
were  in  use,  the  number  of  persons  killed  while 
coupling  and  uncoupling  cars  was  2.9,  and  the 
number  injured  was  76.9  for  every  1000  employed 
in  this  operation.  In  1908,  when  the  law  was 
generally  observed,  the  number  killed  was  only  1, 
and  the  number  injured  only  16.1  for  every  thou- 
sand. In  other  words,  the  number  of  fatalities 
in  this  department  of  railroad  service  was  reduced 
to  one  third,  and  the  number  of  accidents  to  one 
fifth  what  it  had  previously  been,  by  this  one  simple 
remedy.  How  far  accident  prevention  may  be 
carried  by  intelligent  attention  to  the  problem  is 
proved  further  by  the  fact  that  in  1908  there  was 
not  a  single  passenger  killed  on  the  railroads  of 
Great  Britain,  and  that  one  well-known  railroad 

[30] 


INDUSTRIAL  ACCIDENTS 

system  in  this  country  is  said  to  have  been  equally 
free  from  accidents  to  passengers  for  ten  successive 
years. 

Accident  prevention  is  equally  possible  in  other 
occupations.  A  report  recently  published  by  the 
United  States  Geological  Survey1  shows  how  Euro- 
pean countries  have  reduced  the  number  of  acci- 
dents in  their  coal  mines  by  imposing  and  enforc- 
ing regulations  in  regard  to  the  size  of  the  charge 
that  may  be  fired  in  a  mine,  the  time  when  charges 
may  be  set  off,  the  kind  of  safety  lamps  that  must 
be  used,  etc.  Engineers  agree  that  coal  mining 
is  naturally  safer  in  the  United  States  than  in 
Europe,  where  mines  are  deeper  and  veins  are  nar- 
rower. It  is  no  exaggeration  to  say  that  we  could 
reduce  the  number  of  fatal  and  non-fatal  accidents 
that  occur  in  coal  mining  to  one  third,  or  even  one 
fourth,  the  present  figures,  if  we  would  give  the 
attention  to  the  problem  that  it  receives,  for  ex- 
ample, in  Belgium.  And  we  must  do  this.  The 
present  wanton  sacrifice  of  lives  and  limbs  is  a 
national  disgrace! 

The  final  method  of  checking  accidents  is  to 
make  them  costly  to  employers.  In  saying  this, 

1  Coal-Mine  Accidents:  Their  Causes  and  Prevention. 
By  Clarence  Hall  and  Walter  O.  Snelling.  1907. 

[31] 


SOCIAL  INSURANCE 

I  do  not  wish  to  put  the  blame  for  the  present 
situation  upon  employers.  We  must  all  share  it. 
It  is  a  result  of  our  American  haste  and  our  tend- 
ency not  to  count  the  cost  so  long  as  the  end  aimed 
at  is  attained.  But  there  are  different  ways  of 
attaining  ends.  We  have  too  Jong ;_ been,  ^satisfied 
with  a  system  of  accident  indemnity  that  encour- 
aged employers  not  to  count  the  cost  of  human 
limbs  and  human  lives.  A  different  system,  one 
which  will  put  a  price  on  every  arm  and  leg  and 
life  that  may  be  sacrificed  on  the  altar  of  industry, 
as  urged  in  the  next  chapter,  must  be  adopted. 

Along  these  lines  —  fuller  information  in  regard 
to  accidents,  wise  safety  and  sanitary  regulations 
strictly  enforced  through  frequent  inspections, 
and  a  system  of  workmen's  compensation  that 
will  make  the  employer  the  eager  co-worker  with  the 
inspector  in  the  effort  to  prevent  —  great  progress 
may  be  made  in  reducing  the  number  and  seri- 
ousness of  industrial  accidents.  Can  an  equally 
favorable  claim  be  made  in  regard  to  the  preven- 
tion of  illness? 

We  have  no  exact  statistics  as  to  the  amount  of 
illness  in  the  United  States.  Special  inquiries, 
however,  such  as  that  of  Dr.  Jacobs,  into  the 
amount  of  illness  calling  for  hospital  treatment  in 

[32] 


INDUSTRIAL  ACCIDENTS 

New  York  City,  appear  to  indicate  that  the  situa- 
tion here  is  not  very  different  from  the  situation 
in  the  United  Kingdom.  On  the  basis  of  English 
statistics,  Dr.  Farr  concluded,  some  twenty-five 
years  ago,  that  in  Great  Britain  and  Ireland  for 
every  death  in  the  community  there  are  a  little 
more  than  two  years  of  illness.  This  amounts  to 
saying  that  two  persons  are  continually  ill  for  every 
one  person  who  dies  in  a  given  period.  Need- 
less to  say,  the  persons  ill  vary  constantly.  The 
figures  indicate  merely  that,  for  every  death,  two 
years  of  illness  fall  to  the  lot  of  some  persons  some- 
where. 

According  to  the  most  recent  mortality  statis- 
tics, the  number  of  deaths  in  the  United  States  in 
1908  was  about  l^OO^OO.1  This  would  indicate, 
if  we  apply  Farr's  formula,  that  as  many  as 
3,000,000  persons  were  continuously  ill  during  that 
year.  Of  these,  according  to  a  careful  estimate,  as 
many  as  500,000  were  afflicted  with  tuberculosis, 
half  of  them  being  completely  incapacitated  by  the 
disease,  and  the  other  half  partly  incapacitated. 

1  The  actual  number  of  deaths  reported  in  the  registration 
area  was  691,574.  As  this  area  included  only  one  half  of  the 
population  of  the  country,  and  some  deaths  were  undoubtedly 
not  reported,  the  figure  for  the  whole  country  is  put  at  1,500,000. 

D  [33  ] 


SOCIAL  INSURANCE 

On  the  average,  thejBgures_ indicate & loss-of.  13 
days  a  year  by  each  man,  woman,  and  child  in  the 
country,  as  a  result  of  illness.1 

This  loss  is  so  appalling  that  it  is  difficult  to 
appreciate  at  once  its  full  significance.  If  we  as- 
sume that  the  proportions  in  the  different  age 
classes  of  ill  persons  correspond  to  the  mortality 
figures,  more  than  one  fourth  of  this  illness  affected 
children  under  five  years  of  age;  more  than  two 
fifths,  persons  from  twenty  to  sixty-five  years  of 
age;  and  one  fourth,  persons  over  sixty-five  years 
of  age.2  It  would  thus  appear  that  more  than 
1,200,000  persons  from  twenty  to  sixty-five  years 
of  age,  or  in  the  period  of  active  manhood  and 
womanhood,  were  continuously  ill.  When  we 
compare  these  1,000,000  odd  mature  men  and 
women  who  are  ill  every  day  with  the  number  of 
victims  of  industrial  accidents,  the  greater  seri- 
ousness of  the  problem  which  illness  presents  is 
apparent. 

1  These  estimates  agree  with   those   of  Professor   Irving 
Fisher,  from  whose  valuable  Report  on  National  Vitality  (Wash- 
ington, 1909)  many  of  the  following  facts  in  regard  to  illness 
and  its  prevention  are  taken. 

2  This   undoubtedly   involves   an   understatement   of    the 
amount  of  illness  that  affects  the  higher  age  classes,  as  it  is 
well  known  that  morbidity  increases  with  age. 

[34] 


INDUSTRIAL  ACCIDENTS 

The  best  way  to  determine  what  proportion  of 
this  illness  is  preventable  is  to  start  again  with  the 
facts  revealed  by  the  mortality  statistics.  Much 
illness  is,  of  course,  due  to  minor  ailments  rarely 
if  ever  causing  death.  A  large  part,  however,  is 
the  consequence  of  the  diseases  which  contribute 
each  year  to  the  death  rate.  By  considering  these 
diseases  from  the  view-point  of  preventability,  we 
may  get  some  idea  of  the  extent  to  which  illness  is 
preventable. 

The  first  fact  which  must  impress  the  student  of 
death  rates  is  the  extent  to  which  thgse  rates  j^ary 
among  different  countries  and  among  different 
sections  of  the  same  country.  Recent  statistics 
indicate  that  the  number  of  persons  who  die  in  a 
year,  in  proportion  to  1000  of  the  population, 
ranges  from  only  13.5  in  Denmark  (1906)  and  14.4 
in  Sweden  (1906)  to  42.3  (males)  in  India  (1901). 
In  the  registration  area  of  the  United  States  the 
death  rate  in  1908  was  15.3.1  When  we  go  be- 
hind this  average  figure,  we  discover  that  varia- 
tions within  the  United  States  are  very  striking. 

1  This  is  undoubtedly  lower  than  is  warranted  by  the  actual 
facts,  because  of  incomplete  returns  from  some  parts  of  the 
registration  area.  In  1900  Professor  Wilcox  put  the  corrected 
death  rate  at  about  18. 

[35] 


SOCIAL  INSURANCE 

As  regards  the  different  states,  the  rates  for  1908 
vary  from  10.1  and  11.6,  in  South  Dakota  and 
Wisconsin  respectively,  to  17  and  18.4  in  Colorado 
and  California  respectively.  Cities  show  even 
wider  variations.  Thus,  St.  Paul  and  Minneapolis 
report  rates  of  10.1  and  10.3,  which  rival  the  low 
rate  for  South  Dakota;  while,  at  the  other  ex- 
treme, Fall  River,  New  Orleans,  and  San  Francisco 
show  rates  in  excess  of  22.  New  York  City  shows 
a  rate  midway  between  these  extremes,  of  16.8. 

The  reasons  for  these  wide  variations  become 
apparent  as  soon  as  we  study  the  mortality  from 
different  diseases  in  different  localities,  and  among 
different  classes  of  the  population.  A  few  illus- 
trations will  make  this  clear  and  will  explain  why 
physicians  generally  take  such  optimistic  views  of 
the  possibilities  of  disease  prevention. 
W)  Some  diseases,  like  cholera  and  smallpox,  which 

used  to  decimate  periodically  the  populations  of 
whole  countries,  are  now  almost  forgotten  in  the 
Western  World,  although  they  are  still  serious 
scourges  in  the  East.  It  is  the  persistence  of  these 
diseases  and  the  ravages  of  famine  which  make  the 
death  rate  of  India  nearly  three  times  as  high  as 
the  death  rate  of  the  United  States. 

More  recent  has  been  the  successful  campaign 
[36] 


INDUSTRIAL  ACCIDENTS 

that  has  been  waged  against  yellow  fever  in  sec- 
tions where  it  used  to  be  one  of  the  chief  causes  of 
a  high  death  rate.  To  cite  only  the  experience  of 
Havana,  Cuba,  before  the  American  occupation, 
the  death  rate  from  this  disease  rose  as  high  in 
some  years  as  640  per  100,000.  Even  in  1900, 
the  year  during  which  American  sanitary  engineers 
were  making  a  clean-up  of  the  city,  the  rate  was 
124.  In  1901  the  rate  fell  to  7,  and  during  the 
next  three  years  —  1902,  1903,  and  1904  —  not  a 
single  death  from  yellow  fever  was  reported. 

Less  sensational,  but  still  impressive,  is  the  prog- 
ress made  in  coping  with  malaria  since  the  con- 
nection of  this  disease..with  the  vagrant  mosquito 
was  discovered.  During  the  last  eight  years  the 
deaths  ascribed  to  malarial  fever  in  the  United 
States,  per  100,000  of  tKe  population,  have  de- 
creased by  gradual  steps  from  5.4*  to  2.5.  This 
disease,  which  used  to  be  a  serious  scourge  in  many 
sections  of  the  country,  is  thus  gradually  losing  its 
importance. 

More  impressive  still  are  the  results  that  have 
followed  improvements  in  the  public  water  supplies 
of  cities  in  the  United  States  which  have  shown 
a  high  death  rate  from  jyphoid  fever.  Thus,  in 
Lawrence,  Massachusetts,  the  death-rate  from  this 

[37] 


SOCIAL  INSURANCE 

disease  was  reduced  from  105  to  22  per  100,000 
as  a  consequence  of  improving  the  city's  water 
supply.  In  1907  Pittsburg  had  the  unenviable 
distinction  of  showing  the  highest  death  rate  from 
tyhoid  fever,  130.8,  of  any  city  in  the  civilized  world. 
Allegheny  was  a  close  second,  with  a  death  rate  of 
96.9.  During  the  next  year,  in  consequence  of  the 
operation  of  a  new  filtration  plant,  the  death 
rate  for  Pittsburg  and  Allegheny  together  —  the 
Greater  Pittsburg  —  was  brought  down  to  46.6, 
or  about  to  the  point  at  which  the  death  rate  from 
this  disease,  for  the  whole  United  States,  stood  in 
1890.  That  this  is  only  a  beginning  in  the  direc- 
tion of  the  improvement  that  must  follow  the  in- 
troduction of  pure  water,  pure  milk,  and  pure  air 
into  regions  previously  polluted,  is  shown  by  the 
fact  that,  in  the  same  period,  Cincinnati  reduced 
its  death  rate  from  typhoid  from  46.4  (1907)  to 
18.6  (1908),  and  that,  in  the  United  States  as  a 
whole,  the  death  rate  from  this  cause  was  brought 
down  from  46.3,  in  1890,  to  25.3  in  1908.  That 
this  progress  may  continue,  until  typhoid  follows 
malarial  fever  into  the  position  of  an  unimportant 
disease,  is  suggested  by  the  fact  that  Worcester,  Jer- 
sey City,  Paterson,  and  Richmond  Borough  of 
New  York  already  show  death  rates  from  typhoid 

[38] 


INDUSTRIAL  ACCIDENTS 

of  10  or  less,  and  that  even  this  rate  is  high  in  com- 
parison with  the  rates  for  the  cities  of  western 
Europe.  Thus,  the  rate  for  London  in  1907  was 
only  5;  that  for  Edinburgh,  2;  that  for  Paris,  8; 
for  the  Hague,  1;  for  Berlin,  Hamburg,  and  Vienna, 
4;  and  for  Munich,  3.  There  is  no  reason  why 
similarly  low  rates  should  not  be  ultimately  at- 
tained by  the  whole  United  States. 

Official  figures  do  not  yet  indicate  in  an  equally 
striking  way  that  progress  is  being  made  in  lessen- 
ing deaths  from  tuberculosis,  but  they  do  show  a 
steady,  if  gradual,  improvement.  Thus,  the  num- 
ber of  deaths  from  tuberculosis  of  all  forms  in  the 
United  States,  per  100,000  of  the  population,  de- 
creased in  the  five  years  from  1904  to  1908  from 
201.6  to  173.9.  The  decline  in  deaths  from  tuber- 
culosis of  the  lungs  was  even  more  marked,  the 
rate  falling  from  177.3,  in  1904,  to  149.6,  in  1908. 
In  view  of  the  short  time  during  which  the  cam- 
paign against  the  white  plague  has  been  carried  on, 
on  a  scale  at  all  commensurate  with  the  evil,  this 
reduction  in  the  death  rate  from  tuberculosis  of 
nearly  15  per  cent  in  five  years  is  highly  encour- 
aging. Professor  Irving  Fisher  estimates  on  the 
basis  of  the  opinions  of  specialists  whom  he  con- 
sulted that  the  mortality  from  consumption  may 

[39] 


SOCIAL  INSURANCE 

be  reduced  75  per  cent.  Others  go  so  far  as  to 
predict  that  tuberculosis  will  one  day  follow 
cholera,  smallpox,  and  yellow  fever  in  becoming 
one  of  the  rare  causes  of  death  in  civilized  coun- 
tries. That  the  death  rate  from  this  cause  may 
and  will  be  greatly  reduced  in  the  future,  no  well- 
informed  person  questions. 

In^addition  to  reducing  the  frequency  with  which 
specific  diseases  cause  illness  and  death,  sanitation 
and  attention  to  the  laws  of  health  may  increase 
greatly  the  resisting  power  of  the  human  organism 
to  diseases  in  general.  There  can  be  no  question 
that  economic  conditions  have  an  important  in- 
fluence on  health  and  vitality.  Thus,  Newsholme 
found  that  in  Glasgow  the  death  rate  for  families 
living  in  one-  and  two-room  houses  was  27.7;  for 
families  living  in  three-  and  four-room  houses,  19.5; 
and  for  families  living  in  five  rooms  and  over, 
11.2.1  Similarly,  Rowntree  discovered  that  the 
death  rates  in  York,  in  three  sections  which  he 
distinguishes  as  "poorest,"  "middle,"  and  "high- 
est," were  27.8,  20.7,  and  13.5.2  Levasseur  made 
a  similar  comparison  of  different  quarters  of  Paris 
which  showed  even  more  striking  differences.  The 

1  Vital  Statistics,  1899,  p.  163. 

2  Poverty:  A  Study  of  Town  Life,  1902,  p.  205. 

[40] 


INDUSTRIAL  ACCIDENTS 

death  rates  he  found  were:  poorest,  31.3;  middle, 
16.2;  highest,  13.4.1  Such  calculations  confirm 
the  conclusion  which,  in  any  event,  would  com- 
mend itself  to  common  understanding,  that  every 
advance  in  the  campaign  against  poverty  is  also  an 
advance  against  disease  and  death,  which  are  them- 
selves frequent  causes  of  poverty. 

It  is  impossible,  with  our  present  knowledge,  to 
estimate  the  extent  to  which  illness  and  death 
are  preventable.  Nevertheless,  it  is  suggestive  to 
bring  together  the  views  of  physicians  and  others 
on  this  subject,  and  to  hazard  a  guess  as  to  what 
may  be  done.  A  notable  effort  of  this  sort  was 
made  by  Professor  Irving  Fisher,  in  the  Report  on 
National  Vitality:  Its  Wastes  and  Conservation, 
which  he  prepared  last  year  for  the  National  Con- 
servation Commission. 

Professor  Fisher's  method  was  to  establish  by 
consultation  with  physicians,  sanitarians,  and  others 
a  percentage  of  preventability  for  each  of  the  ninety 
most  important  diseases  distinguished  in  our  mortal- 
ity statistics,  and  then  to  determine  the  effect  which 
the  prevention  of  all  preventable  diseases  would 
have  upon  the  death  rates  for  different  age  classes. 

As  we  should  expect,  he  found  that  the  greatest 
1  La  Population  Fran$aise,  1889-1902,  Vol.  II,  p.  403. 
[41] 


SOCIAL  INSURANCE 

field  for  advance  is  presented  by  the  diseases  to 
which  infants  and  young  children  succumb.  His 
calculation  leads  him  to  believe  that  pure  air, 
pure  milk,  pure  water,  proper  sanitation,  and  at- 
tention to  the  known  laws  of  health,  if  provided 
for  all  children,  would  reduce  the  mortality  of 
infants  47  per  cent  and  that  of  young  children 
(median  age  two  to  eight)  67  per  cent.  If  cor- 
rect, these  estimates  mean,  as  is  pointed  out  in 
the  Census  Bulletin  on  Mortality  Statistics  for 
1908,  "applied  to  the  200,000  deaths  of  infants  and 
children  in  the  registration  area,  or  the  possible 
400,000  deaths  of  these  classes  in  the  United  States, 
a  saving  of  at  least  100,000  or  200,000  lives  each 
year."  And  the  hard-headed  compiler  of  the 
Census  figures  adds,  "This  does  not  seem  unrea- 
sonable, when  we  consider  the  fact  that  there  is 
apparently  no  reason  why  infants,  if  properly 
born  (and  this  means  simply  the  prevention  of 
ante-natal  disease,  and  the  improvement  of  the 
health  and  conditions  of  living  of  their  parents), 
should  die  at  all  in  early  infancy  or  childhood, 
except  from  the  comparatively  small  proportion 
of  accidents  that  are  strictly  unavoidable." 

Applying    the    same    method    to    the    diseases 
which    carry    off    each    year    older    children    and 
[42] 


INDUSTRIAL  ACCIDENTS 

adults,  Professor  Fisher  estimates  that  49  per  cent 
of  the  deaths  due  to  the  diseases  of  youth  and 
middle  age  (median  age  23  to  49)  are  preventable, 
and  28  per  cent  of  those  due  to  the  diseases  f>f  ad- 
vancedage  (median  age  52  to  83).  Combining 
these  figures,  he  concludes  that  42.3  per  cent  of 
the  deaths  which  now  occur  might  be  prevented, 
or,  more  properly,  postponed. 

To  make  it  clear  what  such  a  change  would 
mean  to  the  people  of  the  United  States,  he  trans- 
lates this  42.3  per  cent  into  its  equivalent  in  the 
average  addition  to  the  length  of  life  that  would 
result  from  it.  The  average  duration  of  life  in 
the  United  States  at  present  he  estimates,  on  the 
basis  of  the  available  evidence,  to  be  forty-five 
years.  This  average  he  finds  would  be  increased 
by  over  fourteen  years,  or  nearly  one  third,  if 
deaths  were  prevented  or  postponed,  as  he  is  con- 
vinced they  might  be.  Of  this  increase,  "4.4 
years  would  be  caused  by  reducing  infant  deaths 
under  or  near  one  year;  1.5,  by  reducing  mor- 
tality from  children's  diseases;  6.8,  from  reducing 
the  diseases  of  middle  life,  especially  tuberculosis 
and  typhoid;  and  only  1.3  by  reducing  the  mor- 
tality of  diseases  the  deaths  from  which  usually 
come  after  50  years  of  age." 

[43] 


SOCIAL  INSURANCE 

Another  aspect  of  illnesses  that  may  be  pre- 
vented and  deaths  that  may  be  postponed  is  their 
cost.  Professor  Fisher  concludes  his  report  with 
some  calculations  under  this  head  which. I  cannot 
refrain  from  quoting.  Estimating  that  the  num- 
ber of  persons  who  are  sick  all  the  time  in  the 
United  States  is  about  3,000,000,  and  that  very 
close  to  one  third  of  these  —  or  1,000,000  —  are 
in  the  working  period  of  life,  he  figures  out 
$500,000,000  as  the  minimum  loss  in  earnings. 
To  this  he  would  add  $1,500,000,000  as  the  cost 
of  medical  attendance  and  other  extraordinary 
expenditures  necessitated  by  illness.  This  figure, 
he  admits,  may  be  too  large.  For  it  he  suggests 
that  we  substitute  the  average  expenditure  con- 
nected with  illness  found  to  be  incurred  by  the 
wage  earners'  families  investigated  by  the  United 
States  Bureau  of  Labor  in  its  study  of  wage- 
earners'  budgets,  $27,  multiplied  by  the  17,000,000 
odd  families  living  in  the  United  States.  The 
resulting  total,  $459,000,000,  may  safely  be  said 
to  be  much  less  than  the  actual  cost  of  this  item. 
The  actual  cost  of  illness  in  the  United  States,  in— 
eluding  the  cost  of  medical  attendance  and  the 
loss  in  earnings,  is  certainly,  therefore,  not  less 
than  $1,000,000,000  a  year,  and  may  be  as  much 

[44] 


INDUSTRIAL  ACCIDENTS 

as  $2,000,OOJ^OOO.  That  this  estimate  is  conserva- 
tive is  shown  by  comparing  it  with  estimates  that 
have  been  made  by  physicians  from  time  to  time. 
Thus,  Dr.  George  M.  Kober  has  calculated  that 
typhoid  fever  alone  costs  the  country  not  less 
than  $350,000,000  per  year.  Dr.  George  M. 
Gould  has  estimated  that  sickness  and  death  in 
the  United  States  cost  $3,000,000,000  annually, 
and  that  at  least  a  third  of  this  is  preventable. 
Professor  Fisher  himself  is  confident  that  fully 
one  half  of  the  loss  due  to  illness,  or  at  a  minimum, 
$500,000,000,  may  be  saved  by  fuller  attention  to 
preventive  measures. 

To  the  loss  due  to  preventable  illness  must  be 
added,  of  course,  the  loss  due  to  deaths^ that 
might^^lmye  been  prevented  _ or_  postponed.  Esti- 
mating the  annual  number  of  deaths  in  the  United 
States  at  1,500,000,  and  assuming  that  630,000  of 
these  deaths  are  preventable  or  postponable,  he 
concludes  that  the  saving  to  the  community  that 
would  result  from  the  prolongation  of  life  which 
he  deems  possible  would  amount  to  $1,000,000,000. 
Thus,  the  total  saving  that  may  be  expected  to 
result  from  due  attention  to  the  conservation  of 
national  vitality  is  not  less  than  $1,500,000,000 
a  year,  and  may  be  much  more. 

[45] 


SOCIAL   INSURANCE 

A  discussion  of  all  the  measures  that  may  be 
taken  to  prevent  illness  and  postpone  death  would 
carry  us  into  the  technical  field  of  preventive 
medicine.  It  is  a  remarkable  fact,  however, 
that  the  physicians  who  are  most  optimistic  in 
regard  to  the  problem  of  increasing  national  vital- 
ity and  prolonging  human  life  pin  their  faith, 
not  so  much  to  novel  methods  of  combating  disease, 
as  to  the  wider  extension  of  simple  preventive  and 
protective  measures  that  have  long  been  familiar. 

Thus,  Professor  Fisher  shows  that  pf  the  ninety 
diseases  that  appear  as  the  most  important  causes 
of  death  in  the  United  States,  seven  account  for 
more  than  half  of  the  shortening  of  life  which  he 
considers  preventable.  These  are  diarrhea  and 
enteritis,  broncho-pneumonia,  meningitis,  typhoid 
fever,  tuberculosis  of  the  lungs,  violence,  and 
pneumonia.  Together,  these  seven  causes  shorten 
the  average  duration  of  life  in  the  United  States 
needlessly  by  more  than  eight  years.  The  means 
for  combating  these  causes  of  death  on  which 
physicians  place  the  greatest  reliance  are  pure 
milk,  pure  water,  pure  air,  and  protection  from 
accidents.  If  by  a  wise  combination  of  community 
action  and  private  philanthropy  impure'  milk, 
impure  water,  impure  air,  and  unnecessary  exposure 
[46] 


INDUSTRIAL  ACCIDENTS 

to  accidents  could  be  eliminated  from  American 
life,  its  average  duration  might  be  extended  at 
least  eight  years,  and  probably  a  good  deal  more, 
since  these  are  contributing  factors  in  perpetuating 
other  diseases  also. 

The  means  to  be  taken  to  insure  pure  milk,  pure 
water,  pure  air,  and  protection  against  needless 
accidents  to  an  ever  larger  proportion  of  our  people 
are  various  but  simple.  All  that  is  really  necessary 
is  that  public  opinion  be  educated  up  to  the  point 
of  demanding  these  indispensable  conditions  to 
health,  and  municipalities  will  devise  measures 
to  insure  them.  Municipalities,  as  a  rule,  already 
assume  responsibility  for  furnishing  pure  water 
to  their  inhabitants.  Their  standards  of  purity 
are  often  much  too  low,  but  there  is  little  difference 
of  opinion  as  to  the  means  to  make  them  higher. 

Pure  milk  and  pure  air  are  not  so  easily  secured, 
but  that  they  can  be  secured  is  proved  conclusively 
by  the  experience  of  those  municipalities  at  home 
and  abroad  which  are  fully  alive  to  their  importance. 
No  academic  objections  to  municipal  socialism 
should  deter  us  from  insisting  that  it  is  just  as 
much  the  duty  of  the  municipality  to  see  to  it 
that  pure  milk  and  pure  air  are  within  the  reach 
of  every  citizen  as  that  pure  water  is  available. 
[47] 


SOCIAL  INSURANCE 

Provision  of  pure  milk  may  be  brought  about  by 
a  proper  combination  of  state  and  municipal 
regulation  and  inspection,  or  may  be  achieved  only 
through  municipal  pure -milk  depots.  This  is 
a  technical  problem  that  may  call  for  different 
answers  in  different  sections,  but  whatever  the 
answer,  nothing  should  deter  us  from  pursuing 
the  goal  until  it  is  attained. 

Pure  air  for  city  dwellers  may  be  secured  by 
tenement  house  and  factory  and  workshop  regu- 
lations and  inspection,  or  it  may  be  attainable 
only  through  the  systematic  reconstruction  of  our 
cities,  and  the  redistribution  of  congested  popu- 
lations over  wider  areas  and  in  more  healthful 
sections.  Here,  again,  the  goal  is  the  thing  to 
be  held  in  view  and  to  be  worked  toward,  irre- 
spective of  the  means  that  may  prove  to  be  neces- 
sary for  its  attainment. 

In  addition  to  the  provision  of  pure  water,  milk, 
and  air,  for  which  we  must  depend  upon  municipal 
and  state  action,  there  are  more  complex  means 
of  combating  disease  and  strengthening  vitality, 
for  guidance  in  the  application  of  which  we  may 
well  look  to  the  national  government.  It  is  an 
amazing  fact  that,  up  to  the  present  time,  our 
federal  government  has  devoted  much  more  time 

[48] 


INDUSTRIAL  ACCIDENTS 

and  money  to  the  protection  of  the  lives  of  cattle, 
sheep,  and  hogs  than  it  has  to  that  of  human  beings. 
The  Agricultural  Department  has  long  been  ef- 
fectively organized  to  study  the  conditions  favor- 
able to  the  health  and  development  of  plants  and 
animals.  We  are  still  without  any  department  to 
consider  the  conditions  favorable  to  the  health 
and  development  of  men  and  women.  Millions 
of  dollars  are  expended  every  year  —  and  wisely 
expended  —  on  the  agricultural  experiment  sta- 
tions, and  our  knowledge  in  regard  to  methods 
of  combating  the  diseases  to  which  plants  and 
animals  are  subject  has  been  greatly  extended. 
No  similar  provision  is  made  for  the  study  of  hu- 
man diseases,  and  though  valuable  work  .has  been 
done  in  this  field  by  army  surgeons  and  other 
federal  officials,  they  have  worked  without  ade- 
quate financial  assistance  and  without  the  per- 
sistent cooperation  that  is  only  possible  in  a 
permanent  governmental  department  or  bureau. 

It  is  these  considerations  that  caused  President 
Taft,  in  a  recent  message  to  Congress,  to  follow 
President  Roosevelt  in  advocating  the  creation  of 
a  Federal  Bureau  of  Health,  which  should  under- 
take to  do  for  men  and  women  what  the  Agricul- 
tural Department  is  doing  so  well  for  plants  and 

[49] 


SOCIAL  INSURANCE 

domestic  animals.  It  is  earnestly  to  be  hoped 
that  this  recommendation  may  lead  to  legislation, 
and  that  in  a  short  time  the  federal  government 
may  be  doing  its  share  in  the  work  of  combating 
disease,  to  which  so  many  agencies  are  now 
contributing.  That  these  agencies  together  will 
steadily  increase  our  knowledge  of  the  causes 
and  prevention  of  diseases  that  now  baffle  medical 
science  must  be  the  conviction  of  every  one  who 
considers  what  has  already  been  accomplished. 
The  same  concentrated  attention  that  mastered 
yellow  fever  must  triumph  over  the  hook-worm 
disease,  if  the  proper  treatment  of  that  malady 
is  not  already  understood.  The  same  patient 
investigation  that  has  yielded  our  present  knowl- 
edge of  tuberculosis  must  in  time  clear  up  the 
mystery  which  surrounds  cancer.  So,  one  by  one, 
the  dread  diseases  that  have  pursued  humanity 
with  illness  and  premature  death  in  the  past  must 
be  shorn  of  their  terrors  by  the  progress  of  medical 
knowledge.  The  prospect  of  such  progress  was 
never  brighter  than  at  present.  Professor  Fisher's 
estimate  that  the  length  of  life  may  be  prolonged 
by  one  third  may  now  seem  extreme,  but  changes 
may  be  imminent  which  will  make  it  appear  un- 
duly cautious.  Physicians  are  not  lacking  who 

[50] 


INDUSTRIAL  ACCIDENTS 

insist  that  a  time  will  come  when  all  diseases  will  be 
understood,  and  all  who  care  to  obey  the  known 
laws  of  health  may  look  forward  confidently  to 
a  green  old  age.  But  this  prediction  refers  to 
a  future  still  remote,  and  even  the  most  sanguine 
prophets  of  the  new  day,  like  Pasteur  and  Metch- 
nikof,  would  hardly  urge  that  present  policies  be 
determined  by  it. 

I  have  devoted  this  chapter  to  the  prevention  of 
industrial  accidents,  illness,  and  premature  death, 
not  because  I  had  any  specially  novel  or  significant 
methods  of  prevention  to  present,  but  because 
I  wished  it  clearly  to  appear  that  the  measures 
I  shall  advocate  for  indemnifying  those  who  suffer 
because  of  these  evils  are  not  substitutes  for 
preventive  methods,  but  merely  supplements  to 
them.  In  any  program  of  social  reform  preven- 
tion of  these  evils  must  always  be  given  the ' 
first  place.  If  we  could  entirely  prevent  them, 
then  preventive  measures  alone  would  suffice. 
Unfortunately,  we  jgannot  entirely  prevent  them. 
The  number  of  fatal  accidents  that  occur  in  the 
United  States  may  be  cut  in  two.  Non-fatal  acci- 
dents may  be  reduced  in  equal  proportion.  Two 
fifths  of  the  illness  that  now  burdens  our  people 
may  be  checked,  and  the  average  duration  of  life 

[51] 


SOCIAL  INSURANCE 

may  be  extended  by  one  third.  These  improve- 
ments may  be  attained,  and  we  must  all  work  for 
them  in  season  and  out  of  season.  But  even  after 
they  are  attained,  and  much  more  during  the  many 
years  while  we  are  striving  for  their  attainment, 
industrial  accidents,  illness,  and  premature  death 
will  impose  a  heavy  burden  on  those  who  suffer  in 
consequence  of  them.  In  the  next  chapter  I  shall 
consider  what  may  be  done  to  lighten  this  burden 
and  check  the  stream  of  poverty  and  pauperism 
that  is  now  directly  traceable  to  these  sources. 


[52] 


CHAPTER  III 

INDUSTRIAL  ACCIDENTS,   ILLNESS,  AND 
PREMATURE  DEATH:   COMPENSATION 

IT  is  not  surprising  that  the  United  States  com- 
pares unfavorably  with  other  countries  in  the 
number  of  its  industrial  accidents.  Our  haste, 
our  recklessness,  our  eager  desire  to  equip  our 
plants  with  the  latest  and  largest  machinery  and 
appliances,  all  contribute  to  this  result.  *  It  is 
matter  for  surprise,  however,  that  we  go  on  dealing 
as  we  do  with  the  victims  of  industrial  accidents. 
Instead  of  treating  them  generously,  or  even 
justly,  we  continue  to  permit  compensation  for 
their  injuries  to  depend  on  the  operation  of  a  law 
of  negligence  which  has  been  discarded  as  barba- 
rous and  out  of  date  by  the  rest  of  the  civilized 
world. 

Under  our  employers'  liability  laws,  an  injured 
workman  can  recover  damages  only  in  case  he  can 
convict  the  employer  of  fault.  An  employer  is 

[53] 


SOCIAL  INSURANCE 

bound  to  use  reasonable  care  for  the  safety  of  his 
employees  while  they  are  at  work.  This  is  held 
to  include  providing  a  reasonably  safe  work  place 
and  reasonably  safe  tools  and  appliances,  exercis- 
ing reasonable  solicitude  in  the  hiring  of  fellow- 
servants,  and  drafting  reasonable  rules  for  the 
regulation  of  the  employment.  It  rests,  of  course, 
with  the  courts  to  determine  what  is  "reasonable" 
in  these  different  connections,  and  by  their  deci- 
sions a  number  of  defenses  have  been  accepted  as 
valid  which  seriously  weaken  the  employer's  re- 
sponsibility. In  the  first  place,  "contributory 
negligence"  on  the  part  of  the  injured  workman 
serves,  in  the  absence  of  statutory  limitation,  as  a 
complete  bar  to  recovery.  Closely  related  to  it 
is  the  "assumption  of  risk"  which  is  always  pre- 
sumed on  the  part  of  the  workman  and  which,  in 
New  York  State,  for  example,  will  bar  recovery 
even  when  injury  results  from  a  clear  violation 
by  the  employer  of  the  requirements  of  the  labor 
law,  provided  the  employee  knew  of  the  violation 
and  nevertheless  continued  at  his  employment. 
Finally,  the  so-called  fellow-servant  rule  is  a  happy 
expedient  for  reducing  corporate  responsibility 
for  accidents  to  the  very  lowest  terms.  Under  it 
the  injured  workman  cannot  recover  from  the  com- 

[54] 


ILLNESS  AND  PREMATURE  DEATH 

mon  employer  if  the  injury  is  due  to  the  negligence 
of  a  fellow- workman  or  "fellow-servant."  Recog- 
nition that  some  employees  are  vice-principals  of 
the  corporate  employer  even  under  the  common 
law,  and  extension  of  the  vice-principal  relation 
by  statute  prevent  the  "fellow-servant"  rule  from 
entirely  relieving  corporations  from  responsibility 
for  accidents  to  their  employees,  but  in  most  of 
the  states  the  general  rule,  even  when  so  amended, 
goes  far  in  this  direction. 

Unless  it  can  be  proved  that  the  accident  is  due 
to  the  negligence  of  the  employer,  as  thus  legally 
circumscribed,  the  whole  burden  of  loss  and  expense 
which  it  entails,  as  well  as  the  pain  and  suffering 
which  it  causes,  must  be  borne  by  the  injured  work-  j 
man  and  those  dependent  upon  him. 

There  are  many  persons,  lacking  neither  in  hu- 
manity nor  intelligence,  who  defend  this  law  as 
essentially  fair  and  just.  The  principle  on  which 
it  rests,  that  is,  that  every  one  should  be  respon- 
sible for  his  own  acts  and  omissions,  and  only  for 
his  own  acts  and  omissions,  seems  to  them  rea- 
sonable, even  necessary.  If  the  employer  is  neg- 
ligent, the  workman  injured  in  consequence  of  such 
negligence  is  certainly  entitled  to  damages.  But 
'if  he  is  not  negligent,  why,  they  ask,  should  the 


SOCIAL  INSURANCE 

employer  be  made  to  pay  compensation?  Why 
punish  a  person  for  what  is  not  his  fault? 

To  answer  these  questions  wisely  we  must  turn 
from  abstract  principles  to  a  consideration  of  the 
social  consequences  of  the  policy,  which,  by  impli- 
cation, they  justify.  Our  employers'  liability  law 
presumes,  as  the  courts  never  tire  of  pointing  out, 
that  reasonable  regard  for  their  own  interest  will 
lead  workmen  to  shun  hazardous  employments 
unless  the  wages  offered  are  sufficiently  high  to 
compensate  them  for  the  risks  they  run.  The  law 
also  presumes,  apparently,  that  workmen  are 
sufficiently  intelligent  and  forethoughtful  to  use 
their  higher  earnings  to  insure  themselves  against 
the  accidents  to  which  they  are  exposed. 

If  these  presumptions  were  borne  out  by  the  facts 
of  industrial  life,  founding  accident  compensation 
on  negligence  might  be  defended.  But  there  is 
not  the  slightest  evidence  to  support  them.  In 
notoriously  dangerous  employments,  such  as  those 
of  the  deep-sea  diver  or  the  sand  hog  engaged  in 
tunnel  construction,  wages  are  indeed  higher  than 
in  safe  employments,  but  by  no  means  as  much 
higher  as  they  should  be  to  offset  the  risks  of  such 
occupations.  On  the  other  hand,  in  employments 
where  the  risk  is  less  notorious,  as,  for  example, 

[56] 


ILLNESS  AND  PREMATURE  DEATH 

that  of  trainmen  on  American  railroads,  wages  are 
not  appreciably  higher  than  they  are  in  compara- 
tively safe  employments.  If  economists  ever  gave 
countenance  to  the  belief  that  competition  tends 
to  adjust  wages  to  the  degree  of  hazard  in  'different 
occupations,  they  have  long  since  abandoned  the 
theory.  Authority  after  authority  might  be  cited 
to  prove  that  this  legal  presumption  is  without 
foundation  in  fact.  Nor  is  it  difficult  to  under- 
stand why  the  self-interest  of  wage  earners  fails 
to  deter  them  from  entering  dangerous  employ- 
ments. The  average  workman,  whatever  his  em- 
ployment, is  an  optimist.  He  may  know  that  a 
certain  proportion  of  his  fellow- workmen  is  likely 
to  be  killed  every  year  and  a  larger  proportion 
injured,  but  he  personally  does  not  expect  to  be 
either  injured  or  killed.  Thus,  a  railroad  train- 
man in  the  United  States  may  learn  from  the  re- 
ports of  the  Interstate  Commerce  Commission  that 
in  a  normal  year  about  one  in  ten  of  his  fellow- 
ployees  will  be  injured  and  one  in  one  hundred 
and  twenty-five  killed.  But  it  does  not  occur  to 
him  to  expect  that  he  will  be  either  injured  or 
killed,  and  in  most  employments,  because  of  the 
lack  of  accident  data,  the  employee  has  no  means 
of  comparing  the  risks  that  he  incurs  with  the  risks 

[57] 


SOCIAL  INSURANCE 

encountered  in  other  industries.  For  these  reasons, 
wages  in  dangerous  trades  continue,  year  after  year, 
little  if  at  all  above  the  wages  paid  in  compara- 
tively safe  employments. 

Moreover,  the  number  of  wage  earners  who  are 
sufficiently  forethoughtful  to  insure  themselves 
against  accident  is  so  small  as  to  be  negligible.  It 
follows  that,  even  when  wages  are  slightly  higher 
because  of  the  danger  of  the  occupation,  the  result 
is  normally  merely  a  somewhat  higher  scale  of 
living  on  the  part  of  the  wage-earner's  family,  no 
adequate  provision  being  made  against  accidents 
when  they  arise. 

It  is  impossible  to  determine  accurately  what 
proportion  of  injured  wage  earners  do,  as  a  matter 
of  fact,  secure  indemnity  from  their  employers 
under  the  present  law.  According  to  the  reports 
of  the  Employers'  Liability  Insurance  companies, 
on  the  average  less  than  one  eighth  of  the  accidents 
that  are  reported  to  them  result  in  the  payment  of 
indemnities.  That  the  proportion  must  be  very 
small  is  proved  by  every  investigation  into  the 
causes  of  accidents.  Such  investigations  show  that 
one  half  or  more  of  the  accidents  that  occur  are 
due  to  the  risks  of  the  industry,  i.e.  cannot  be 
fairly  attributed  to  the  negligence  either  of  the 

[58] 


ILLNESS  AND  PREMATURE  DEATH 

employer  or  the  employee;  they  just  happen.1 
Of  the  remaining  one  half  the  greater  number  are, 
in  the  eyes  of  the  law,  due  to  the  negligence  of  the 
employee  or  of  his  fellow-employees.  Considera- 
bly less  than  one  fourth  can  be  traced  to  the  neg- 
ligence of  the  employer  in  a  sense  that  renders  him 
legally  liable.  The  practical  result  of  saying  that 
the  employer  shall  be  made  to  pay  compensation 
only  when  he  is  personally  at  fault  is,  therefore, 
to  render  a  large  proportion  of  the  victims  of  in- 
dustrial accidents  dependents  on  public  or  private 
charity.  The  maintenance  of  these  unfortunates, 
for  which  employers  disclaim  responsibility,  be- 
comes a  burden  on  society. 

It  is  in  the  light  of  these  facts  that  we  must  con- 
sider the  justice  and  adequacy  of  our  present  em- 
ployers' liability  law.  Wages  are  not  appreciably 
higher  in  dangerous  than  in  safe  employments. 
Even  in  employments  where  they  are  higher,  it  is 
very  exceptional  for  wage  earners  to  insure  them- 
selves against  accidents.  Under  the  present  law 

1  An  oft-quoted  German  table  ascribes  42  per  cent  of  the 
accidents  in  a  certain  year  to  the  hazard  of  the  industry.  An 
equally  authoritative  Austrian  table  puts  the  proportion  at 
70  per  cent.  The  only  states  in  this  country,  Wisconsin  and 
Minnesota,  to  investigate  this  question  show  similarly  wide 
variations.  Thus,  in  Minnesota,  in  1906-1907,  54  per  cent 
were  due  to  the  industry;  in  1907-1908,  71  per  cent. 

[59] 


SOCIAL  INSURANCE 

more,  probably  many  more,  than  one  fourth  of 
those  who  suffer  industrial  accidents  have  to  bear 
the  resulting  loss  in  earnings  without  any  help 
from  the  employer.  Industrial  accidents  are  thus 
one  of  the  most  common  causes  of  poverty  and 
dependency  in  our  American  communities. 

Negligence  is  clearly  too  narrow  a  basis  on 
which  to  rest  society's  policy  with  reference  to 
accidents.  Employers  object  to  being  made  liable 
for  accidents  which  are  not  due  to  their  negli- 
gence, but  why,  it  may  be  asked,  should  they  not 
be  liable  ?  The  majority  of  accidents,  whether  to 
men  or  to  machinery,  to  trainmen  or  to  trains, 
are  necessary  incidents  of  industry  as  it  is  now 
carried  on.  It  is  taken  as  a  matter  of  course 
that  those  who  embark  in  industry  for  their  own 
profit  should  bear  the  loss  connected  with  acci- 
dents to  their  plant  or  equipment.  Experience 
shows  that  they  are  quite  able  to  insure  them- 
selves against  these  risks,  and  to  pass  on  the  cost 
of  insurance  to  consumers  as  one  of  the  normal 
items  in  the  expense  of  production.  Why  should 
they  not  also  bear  the  loss  resulting  from  per- 
sonal injuries  to  their  employees?  That  these  in- 
juries do  not  result  from  their  negligence  is  beside 
the  question.  They  are  regular  and  necessary 

[60] 


ILLNESS  AND  PREMATURE  DEATH 

consequences  of  carrying  on  industry  as  they 
carry  it  on,  and  as  directors  of  industry  they 
should  be  required  to  meet  these  as  well  as  other  ^ 
expenses  involved  in  production.  No  one  is  under 
any  compulsion  to  embark  in  an  industry  against 
his  will.  If  he  does  embark  in  an  enterprise,  does 
not  the  interest  of  society  require  that  he  should 
be  prepared  to  meet  all  of  the  expenses  which  the 
prosecution  of  the  industry  entails?  To  be  sure, 
he  pays  wages  to  his  employees,  but  these  are  not 
sufficient  to  compensate  them  for  the  risks  they 
run.  If  they  are  to  be  compensated,  it  must  be 
through  additional  payments  when  accidents  over- 
take them.  Requiring  the  employer  to  make 
these  additional  payments  is  the  only  practicable 
way  of  adding  accident  compensation  to  the  ex- 
penses of  production  and  passing  it  on  to  con- 
sumers for  whose  benefit  all  industries  are  car- 
ried on. 

Our  employers'  liability  law  is  not  merely  in- 
adequate; it  has  serious,  positive  defects.  The 
wastes  that  result  from  its  operation  are  little 
short  of  appalling.  So  irregular  and  uncertain  is 
the  outcome  of  damage  suits  under  it  that  the 
great  majority  of  employers  feel  compelled  to 
insure  themselves  against  their  liability  in  Em- 

[61] 


SOCIAL  INSURANCE 

ployers'  Liability  Insurance  companies.  Accord- 
ing to  the  reports  of  these  companies  submitted 
to  the  insurance  departments  of  the  various  states, 
not  more,  on  the  average,  than  45  per  cent  of  tae 
premiums  which  employers  pay  to  them  are  ex- 
pended in  the  satisfaction  of  the  claims  of  injured 
workmen.  Of  the  remaining  55  per  cent,  nearly 
one  half  is  expended  in  the  payment  of  agents, 
and  the  remainder  for  administrative  expenses  of 
various  kinds,  among  which  the  cost  of  fighting 
the  suits  of  wage  earners  takes  a  prominent  place. 
When  it  is  considered  that  wage  earners,  in  order 
to  secure  the  damages  to  which  they  are  entitled 
under  the  law,  must,  as  a  rule,  employ  attorneys 
on  their  side,  and  that  the  compensation  of  these 
attorneys  averages  in  the  neighborhood  of  one 
third  of  the  damages  ultimately  obtained,  the 
waste  resulting  from  the  system  is  apparent.  It 
is  no  exaggeration  to  say  that  under  it  wage 
earners,  as  a  rule,  secure  for  their  own  benefit 
not  more  than  30  per  cent  of  what  employers  ex- 
pend in  the  premiums  they  pay  to  insurance  com- 
panies. 

Of  course,  in  the  cases  in  which  employers 
carry  their  own  liability,  or,  by  agreement  with 
their  employees,  substitute  regular  scales  of  corn- 

[62] 


ILLNESS  AND  PREMATURE  DEATH 

pensation  for  the  uncertain  payments  resulting 
from  damage  suits,  the  showing  is  much  more 
favorable.  In  general,  it  must  be  said,  however, 
that  it  is  favorable  only  to  the  extent  that  both 
employers  and  employees  voluntarily  substitute 
some  other  basis  of  compensation  for  that  pre- 
scribed by  law.  Thus,  it  is  only  by  disregard  of 
the  present  law  that  anything  like  a  satisfactory  / 
system  of  accident  indemnity  has  been  developed.  I 

Almost,  if  not  quite,  as  serious  as  the  wastes 
which  result  from  our  system  is  the  demoralizing 
influence  which  it  has  on  both  employers  and 
employees.  To  take  advantage  of  the  law,  an 
injured  workman  is  forced  to  put  himself  in  a 
position  of  hostility  to  the  employer.  On  his 
side,  the  employer  is  compelled  usually  to  pro- 
tect himself  by  recourse  to  an  insurance  com- 
pany. It  is  so  important  that  he  make  no  sign 
that  would  imply  a  sense  of  responsibility  on  his 
part  for  the  occurrence  of  the  accident,  that  his 
contract  with  the  insurance  company  usually 
prevents  him  from  obeying  the  impulses  of  ordi- 
nary humanity  by  doing  what  he  can  for  his 
injured  employee  during  the  weeks  immediately 
following  the  accident.  So  revolting  is  the  re- 
sulting situation  to  the  sense  of  fairness  of  some 

[63] 


AL 


SOCIAL  INSURANCE 

employers,  that  they  not  only  pay  premiums  to 
insurance  companies  to  protect  themselves  against 
suits  for  damages,  but  they  voluntarily  pay  com- 
pensation to  their  workmen  besides.  Under  these 
circumstances,  the  system  penalizes  the  fair- 
minded  employer  and  puts  him  at  a  disadvantage 
in  competition  with  the  employer  who  does  only 
what  the  law  requires. 

Antagonizing  employer  and  employee  is  only 
.x>ne  of  the  many  bad  m6ral  effects  of  the  system. 
The  opportunities  for  litigation  it  affords  have 
given  rise  to  the  pernicious  activity  of  the  ambu- 
lance-chasing lawyer,  on  the  one  side,  and  the 
equally  objectionable  practices  of  the  claim  agent 
on  the  other.  Retainers  and  releases  signed 
under  duress,  protracted  litigation  for  contingent 
fees,  perjured  testimony  on  both  sides,  a  strain- 
ing of  the  law  on  the  part  of  judges  to  keep  ac- 
cident cases  from  notoriously  partial  juries,  vari- 
able and  extravagant  awards  by  these  juries,  — 
these  and  other  evils  are  the  incidental  results  of 
a  system  that  shocks  the  moral  sense  of  the  com- 
munity and  fails  signally  to  remedy  the  social 
problem  with  which  it  is  concerned. 

That  our  system  of  employers'  liability  is  un- 
satisfactory in  its  practical  operation,  nearly  all 

[64] 


ILLNESS  AND  PREMATURE  DEATH 

those  who  have  anything  to  do  with  it  agree. 
There  is  less  unanimity  as  to  the  changes  that 
should  be  made  in  it.  Up  to  the  present  time, 
the  whole  tendency  of  American  legislation  in  this 
field  has  been  to  broaden  the  scope  of  the  employ- 
er's liability  by  taking  away  some  of  the  defenses 
which  now  bar  recovery.  This  was  the  purpose 
of  the  Barnes  Act  of  1906  in  New  York  state,  which 
largely  abrogates  the  fellow- servant  principle  in 
the  case  of  railroad  employees.  The  federal  em- 
ployers' liability  law  of  1908,  applying  to  inter- 
state railroads,  goes  even  farther  in  this  direction. 
It  not  only  abrogates  entirely  the  fellow-servant 
doctrine,  but  also  modifies,  the  "assumption  of 
risk"  principle  and  makes  "contributory  negli- 
gence" a  ground  merely  for  reducing  damages, 
not  for  denying  them  altogether.  The  trouble 
with  this  tendency  is  that,  carried  to  its  extreme 
conclusion,  it  would  still  leave  the  majority  of 
industrial  accidents  unprovided  for.  Moreover, 
it  discourages  but  little  a  resort  to  litigation,  and 
fails  to  do  away  with  the  incidental  evils  which 
result  from  the  present  law. 

Other  countries,  as  already  stated,  have  very 
generally  pursued  a  different  policy.  In  1884, 
Germany  substituted  for  employers'  liability  com- 

[65] 


SOCIAL  INSURANCE 

pulsory  insurance,  under  which  workmen  are 
entitled  to  indemnity,  whatever  the  cause  of  the 
accident.  Germany's  example  was  followed  three 
years  later  by  Austria.  "  In  1894,  Norway  passed 
an  act  requiring  employers  to  insure  their  em- 
ployees against  accidents  in  a  state  insurance  de- 
partment." l  Even  more  significant  for  the  United 
States  was  the  enactment  by  the  British  Parlia- 
ment in  1897  of  the  first  workmen's  compensa- 
tion law.  Under  it  employers  in  certain  enu- 
merated dangerous  industries  were  required  to 
pay  compensation  for  industrial  accidents,  except 
when  due  to  the  serious  and  willful  misconduct 
of  the  injured  workman  himself,  irrespective  of 
the  cause  of  the  injury.  Other  countries  were 
quick  to  adopt  the  new  policy.  "  France  and  Den- 
mark passed  workmen's  compensation  acts  in 
1898.  In  1900,  Spain  and  South  Australia  passed 
compensation  acts  on  the  English  model.  In 
1901,  Sweden  passed  a  compensation  law  permit- 
ting insurance  through  a  state  department  to  be 
substituted  for  the  legal  liability;  the  Nether- 

1  The  quoted  sentences  in  this  and  the  following  paragraphs 
were  written  by  the  author  but  have  already  appeared  in  print 
in  the  First  Report  of  the  (New  York)  Commission  on  Em- 
ployers' Liability  and  Unemployment  presented  to  the  Legis- 
lature, March  19,  1910. 

[66] 


ILLNESS  AND  PREMATURE  DEATH 

lands,  a  law  requiring  insurance  through  a  state 
department;  and  Greece,  a  workmen's  compen- 
sation law  applying  to  the  mining  and  metallur- 
gical industries.  The  next  year  Luxemburg 
adopted  the  German  compulsory  insurance 
system,  while  British  Columbia  adopted  the 
English  plan  of  workmen's  compensation.  In 
1903,  Belgium  introduced  the  English  system, 
and  Italy  made  insurance  against  industrial 
accidents  compulsory.  Since  that  year,  four 
constituents  of  the  British  Empire  —  Cape  Col- 
ony (1905),  Queensland  (1905),  Quebec  (1908), 
and  New  Zealand  (1908)  —  and  Russia  (1908) 
have  passed  workmen's  compensation  acts  after  the 
English  model,  and  Hungary  (1907)  has  declared 
its  preference  for  the  German  system  of  com- 
pulsory insurance."  ^  \  °\  \  0 

Thus,  during  the  last  twenty-six  years,  twenty 
countries  —  including  all  of  the  important  indus- 
trial states  of  Europe  except  Switzerland,  which  is 
about  to  pass  a  compulsory  insurance  law  —  have 
abandoned  the  policy  of  limiting  the  right  of  an 
injured  workman  to  secure  compensation  from  his 
employer  for  an  industrial  accident  to  cases  in 
which  the  employer  has  been  negligent.  "In  its 
place  they  have  adopted  the  policy  of  requiring  em- 

[67] 


SOCIAL  INSURANCE 

* 

ployers  to  idemnify  all  workmen  who  are  injured  in 
their  service,  and  who  have  not  willfully  brought 
the  injury  upon  themselves,  irrespective  of  the 
cause  of  the  injury.  In  other  words,  they  have 
accepted  the  principle  that  each  industry  should 
be  made  to  bear  the  burden  oFTtsTpersonal  accident 
losses  in  the  same  way  that  it  already  bears  the 
burden  of  accidental  losses  to  plant  and  machinery. 
The  employer  is  selected  to  act  as  the  agent  of 
society  in  adding  the  cost  of  workmen's  compensa- 
tion for  industrial  accidents  to  the  other  costs  of 
production,  because  this  is  the  simplest  and  most 
direct  way  of  accomplishing  the  desired  result.  It 
is  assumed  that  he  will  be  reimbursed  for  this  ex- 
pense, as  for  his  other  expenses  of  production,  in 
the  prices  he  receives  for  his  products.  And  ex- 
perience appears  to  have  abundantly  justified  this 
assumption.  Though  opposed  originally  by  em- 
ployers as  unduly  burdensome,  the  new  policies 
are  now  accepted  by  them  as  fair  and  reasonable. 
No  country  that  has  made  the  change  has  rescinded 
from  it.  All  the  more  important  countries,  and 
particularly  Germany  and  the  United  Kingdom, 
have  greatly  extended  the  scope  of  their  accident 
indemnity  laws  since  they  were  first  introduced." 
Though  the  usual  policy  of  these  twenty  coun- 
[68] 


ILLNESS  AND  PREMATURE  DEATH 

tries  is  to  impose  the  entire  burden  of  meeting  the 
accident  indemnities  which  the  law  prescribes  upon 
the  employer,  there  are  certain  exceptions.  Ger- 
many, for  example,  provides  indemnity  for  the 
first  thirteen  weeks  of  incapacity  due  to  industrial 
accidents  from  her  sick-insurance  funds,  to  which 
employees  contribute  two  thirds  and  employers 
only  one  third.  Only  after  thirteen  weeks,  or 
when  the  accident  results  fatally,  does  the  indem- 
nity come  from  the  accident  insurance  funds  con- 
tributed entirely  by  employers.  As  an  offset  to 
the  contribution  to  accident  indemnities  from 
employees,  however,  the  German  law  prescribes  a 
higher  scale  of  compensation  than  is  found  where 
the  whole  burden  falls  on  the  employer.  Thus, 
the  usual  weekly  allowance  during  total  disability 
under  the  German  law  is  two-thirds  wages,  while 
whole  wages  may  be  claimed  in  case  the  injured 
workman  requires  special  attendance.  ^One-half 
wages  is  customary  in  other  countries.  This  ex- 
ception, considering  also  that  German  employers 
have  added  burdens  in  connection  with  illness 
insurance  and  old  age  and  invalidity  pensions,  is, 
therefore,  not  very  important. 

As  to  the  methods  that  are  adopted  for  com- 
pelling employers  to  indemnify  the  victims  of  in- 

[69] 


SOCIAL  INSURANCE 

dustrial   accidents,   three   different   systems   must 
be  distinguished. 

"  Germany's  system  is  that  of  compulsory  insur- 
ance through  accident  insurance  associations  for 
the  different  industries  carried  on  in  the  Empire, 
to  one  of  which  every  employer  must  belong.. 
Under  the  supervision  of  the  Imperial  Insurance 
Department  these  associations  fix  premium  rates 
according  to  the  hazard  of  different  occupations. 
They  have  power  to  penalize  the  employer  whose 
accident  ratio  is  above  the  average  by  advancing 
his  rates.  They  may  prescribe  the  safety  devices 
which  their  members  are  to  use,  and,  through  in- 
spectors, they  are  constantly  occupied  in  trying 
to  prevent  accidents.  They  are  not  required  to 
charge  premiums  high  enough  to  meet  future  obli- 
gations, however,  and  consequently,  as  the  number 
of  victims  of  past  accidents  still  receiving  indem- 
nities increases,  their  rates  mount  higher  and 
higher.  This  is  very  unfair  to  employers  who  are 
just  starting  out  in  business,  and  more  than  generous 
to  employers  who,  after  having  saddled  the  asso- 
ciation with  a  large  number  of  pensionaires,  wind 
up  their  enterprises  and  retire.  Until  some  remedy 
for  this  unequal  distribution  of  the  burden  has  been 
devised,  Germany's  system,  admirable  as  it  is  in 

[70] 


ILLNESS  AND  PREMATURE   DEATH 

many  of  its  features,  must  be  acknowledged  to 
be  imperfect. 

"  Modeled  after  the  German  system  —  though 
different  in  important  details  —  are  the  systems 
of  Austria,  Luxemburg,  Italy,  and  Hungary. 

"  Different  from  the  German  system,  though  some- 
times confused  with  it,  is  the  system  of  compulsory 
state  insurance  against  industrial  accidents.  Un- 
der this  plan,  adopted  by  Norway  and  the  Nether- 
lands, the  employer  must  insure  his  employees 
through  a  state  insurance  department  which  fixes 
the  premiums  and  pays  the  indemnities  prescribed 
by  law  to  those  who  are  entitled  to  them.  This 
system  has  the  great  advantage  of  insuring  consid- 
erate treatment  to  the  victims  of  industrial  acci- 
dents. The  state  department  is  not  in  business 
for  profit  and  is  under  no  temptation  to  evade  its 
obligations.  On  the  other  hand,  the  system  is 
open  to  the  objections  usually  urged  against 
state  as  contrasted  with  private  activity.  There 
is  danger  that  the  premiums  will  not  be  made  high 
enough  and  that  the  department,  like  the  post 
office,  will  be  run  at  a  loss.  This  has  already  been 
the  case  in  Norway. 

"  Modifications  of  the  compulsory  state  insurance 
plan  are  presented  by  Sweden  and  Denmark.  In 

[71] 


SOCIAL  INSURANCE 

Sweden,  insurance  is  not  compulsory,  but  a  state 
insurance  department  is  provided  to  relieve  the  em- 
ployer who  wishes  to  insure  his  employees  through 
it  from  all  further  liability.  This  is  a  compromise 
arrangement  which  is  said  to  have  worked  so  well 
in  that  country  that  the  state  department  is  driving 
all  competitors  from  the  field.  In  Denmark  there 
is  no  insurance  department,  but  a  workmen's 
insurance  council  is  provided  to  which  all  accidents 
must  be  reported,  and  which  fixes  the  indemnities 
which  the  employer,  or  his  agent,  the  insurance 
company,  must  pay. 

"  Differing  only  in  degree  from  the  Danish  system 
is  the  English  system  of  workmen's  compensation. 
Under  it  the  law  prescribes  clearly  the  obligation 
of  the  employer  to  pay  compensation,  the  amount 
of  compensation  he  shall  pay,  —  depending  upon 
the  seriousness  of  the  injury,  the  degree  of  depend- 
ency of  those  left  behind  when  the  accident  results 
fatally,  etc.,  —  and  the  procedure  by  which  the 
compensation  appropriate  to  each  particular  case 
shall  be  determined.  It  does  not  undertake  to 
say  how  the  employer  shall  meet  this  obligation. 
He  may  insure  against  it  if  he  desires,  and  in  that 
case,  under  the  English  law,  recovery  may  be  had 
from  the  insurance  company  up  to  the  extent  of  its 

[72] 


ILLNESS  AND  PREMATURE  DEATH 

contractual  obligation  in  case  the  employer  be- 
comes insolvent.  If  he  does  not  insure,  the  inter- 
ests of  employees  are  partially  safeguarded  by  a 
provision  in  the  English  law  making  them  pre- 
ferred creditors  up  to  £100.  The  French  law  goes 
further  by  imposing  a  special  tax  on  employers 
liable  to  pay  compensation,  and  using  the  proceeds 
to  indemnify  the  victims  of  accidents  in  those  cases 
where  the  employer  becomes  insolvent  after  the 
accident  occurs. 

"  The  great  merit  of  this  third  system  —  a  merit 
which  has  commended  it  to  more  than  half  of  the 
countries  which  have  discarded  the  law  of  negli- 
gence as  a  basis  for  settling  accident  cases  —  is 
that  it  involves  a  minimum  of  compulsion  on  the 
employer  and  little  or~no  new  governmental  ma- 
cKinery  for  its  enforcement.  Under  the  old  liabil- 
ity law  the  employer  had  to  indemnify  injured 
employees  in  certain  cases.  A  workmen's  com- 
pensation act  merely  extends  this  obligation  to 
include  practically  all  cases.  Under  the  old  liabil- 
ity law  the  amount  of  indemnity  had  to  be  deter- 
mined by  a  lawsuit.  A  compensation  act  pre- 
scribes the  amount  of  the  indemnity,  and  thus 
makes  possible  the  substitution  of  some  simple 
arbitration  machinery  for  the  more  complicated 

[73] 


SOCIAL  INSURANCE 

and  expensive  method  afforded  by  a  jury  trial. 
Finally,  the  state  introducing  the  system  of 
workmen's  compensation  is  under  no  necessity 
of  going  into  the  insurance  business,  or  even  of 
altering  its  previous  policy  with  reference  to  in- 
surance companies.  These  merits  appeal  particu- 
larly to  countries  in  which  employers  greatly  prefer 
to  be  left  free  to  meet  the  obligations  which  the  law 
imposes  upon  them  in  the  ways  that  seem  to  them 
best  and  in  which  industrial  activities  on  the  part 
of  the  government  are  little  favored  by  public 
opinion.  This  description  applies  generally  to 
English-speaking  countries.  All  of  these  coun- 
tries that  have  modified  their  accident-indemnity 
laws  up  to  the  present  time  have  chosen  the  work- 
men's compensation  system  in  preference  to  the 
system  of  compulsory  insurance.  Compulsory, 
state-directed  insurance,  on  the  other  hand,  seems 
better  suited  to  the  conditions  of  countries  with 
strong  central  governments  and  accustomed  to 
widely  extended  state  activities.  Germany,  Aus- 
tria-Hungary, Sweden,  Norway,  and  Italy  are 
countries  of  this  type." 

In  view  of  these  considerations,  it  seems  probable 
that  the  English  system  of  workmen's  compensa- 
tion is  better  suited  to  the  spirit  of  American 

[74] 


ILLNESS  AND  PREMATURE  DEATH 

institutions  and  the  habits  of  American  business 
men  than  any  of  the  continental  systems  of  com- 
pulsory insurance.  But  the  adoption  of  any 
system  in  the  United  States  is  fraught  with  grave 
difficulties.  Under  our  form  of  government  any 
change  in  this  field  must  be  through  state  legis- 
lation, except  as  regards  the  territories  and  the 
comparatively  few  persons  engaged  in  interstate 
commerce.  The  obstacles  to  state  action  are  both 
legal  and  economic.  Our  written  constitutions 
~goTso~far  iri~  protecting  the  liberty  and  property 
of  employers  that  there  is  grave  doubt  whether 
a  law  requiring  them  to  pay  even  moderate  com- 
pensation for  accidents  not  due  to  their  own  neg- 
ligence would  be  upheld  by  the  courts. 

The  New  York  Commission  on  Employed 
Liability  and  Unemployment,  created  in  1909,  gave 
much  thought  to  this  matter.  In  the  preliminary 
report  which  it  submitted  to  the  legislature  in 
March,  1910,  it  proposes  to  meet  the  constitutional 
difficulty  by  prescribing  a  system  of  workmen's 
compensation  for  specially  hazardous  industries, 
as  a  part  of  the  policy  of  regulating  these  indus- 
tries under  the  police  power.  For  other  industries 
it  hopes  to  secure  the  adoption  of  the  system  of 
workmen's  compensation  by  permitting  employers 

[75] 


SOCIAL  INSURANCE 

and  employees  by  voluntary  agreement  to  sub- 
stitute it  for  the  requirements  of  the  employers' 
liability  law,  amended  so  as  to  weaken  some  of  the 
present  defenses  of  the  employers. 

The  economic  obstacle  arises  from  the  fact  that 
a  change  in  the  policy  of  one  state  as  regards 
this  important  matter,  however  desirable  in  itself, 
may  have  the  effect  of  putting  employers  in  that 
state  at  a  disadvantage  with  their  competitors 
in  neighboring  states.  In  my  opinion,  this  diffi- 
culty, which  arises  in  connection  with  all  progres- 
sive legislation,  is  greatly  exaggerated  by  those 
who  urge  it.  On  this  point,  European  experience 
throws  an  interesting  light.  This  experience  clearly 
justifies  the  hope  that  the  higher  cost  of  a  reason- 
able system  of  workmen's  compensation  will  be 
more  than  counterbalanced  by  the  advantages  of  the 
system  to  the  employer  in  better  relations  with  his 
employees,  a  higher  grade  of  employees,  and  greater 
immunity  from  costly  and  uncertain  damage  suits. 
The  adoption  by  Germany  of  her  elaborate  system 
of  compulsory  workmen's  insurance  was  coinci- 
dent with  the  beginning  of  a  period  of  industrial 
expansion  that  has  brought  her  to  the  front  rank 
among  the  commercial  nations  of  the  world.  For 
twenty  years  Austria  has  burdened  her  employers 

[76] 


ILLNESS  AND  PREMATURE  DEATH 

with  a  compulsory  insurance  system,  which  Hun- 
gary, part  of  the  same  empire,  has  only  just 
adopted.  All  students  agree  that  Austrian  manu- 
facturers have  fully  held  their  own  in  competi- 
tion with  Hungarian  manufacturers  during  this 
period. 

Finally,  the  United  Kingdom,  which  suffered 
a  setback  in  consequence  of  the  Boer  War  shortly 
after  her  system  of  workmen's  compensation  was 
introduced,  has  enjoyed  a  period  of  great  prosperity 
and  trade  expansion  since  that  system  was  ex- 
tended to  embrace  practically  all  employees  in 
1906. 

Competition  among  European  countries  in  com- 
mon markets  is  quite  as  keen  as  competition  among 
the  different  states  in  the  American  market.  The 
new  system  of  caring  for  the  victims  /of  industrial 
accidents  has  been  introduced  not  by  the  less 
progressive  and  prosperous  countries,  but  by  the 
more  progressive  and  prosperous,  and  there  is 
quite  as  much  evidence  to  show  that  their  pros- 
perity has  been  enhanced  by  the  change  as  the 
reverse.  Here,  as  in  other  connections,  a  policy 
which  advances  the  relations  between  employer 
and  employee  to  a  higher  plane,  and  makes  for 
more  friendly  relations  between  them,  appears  to 

[77] 


SOCIAL  INSURANCE 

redound  in  the  long   run   to   the   advantage   of 
both. 

It  is  very  clear  that  a  better  policy  of  caring  for 
the  victims  of  industrial  accidents  will  never  be 
introduced  in  the  United  States  unless  some 
state  takes  the  lead.  Moreover,  there  is  every 
reason  to  think  that  the  example  of  the  state  that 
acts  as  pioneer  in  this  field  will  be  promptly  fol- 
lowed by  the  other  states,  just  as  the  examples 
set  by  Germany  and  England  have  been  quickly 
followed  by  the  other  European  countries.  All 
agree  that  there  is  a  serious  social  evil  to  be  rem- 
edied. The  experience  of  other  countries  proves 
that  the  system  of  workmen's  compensation  is 
practicable,  and  that  it  greatly  reduces  poverty 
and  dependency  wherever  it  is  introduced.  Under 
these  circumstances,  is  it  too  much  to  hope  that 
one  of  the  states  that  now  has  a  commission  in- 
vestigating this  subject  will,  at  no  distant  date,  set 
an  example  in  this  important  field  of  social  legisla- 
tion for  the  whole  country  to  imitate  ? 1 

The  countries  which  have  taken  the  lead  in 
protecting  their  wage  earners  from  the  losses  due 
to  industrial  accidents,  Germany  and  the  United 

1  These  states  are  New  York,  Minnesota,  Wisconsin,  and 
Illinois. 

[78] 


ILLNESS  AND  PREMATURE  DEATH 

Kingdom,  have  also  grappled  with  the  grave  social 
problem  presented  by  illness.  Even  before  organiz- 
ing machinery  for  compulsory  insurance  against 
accidents,  Germany  made  insurance  against  illness 
compulsory.  Under  the  present  law,  all  employers 
and  all  wage  earners  in  the  Empire  are  required 
to  make  contributions  to  illness  insurance  funds. 
Employers  contribute  one  third  and  employees 
two  thirds  toward  the  premiums  which  experience 
has  proved  to  be  necessary  for  this  purpose.  Out 
of  the  illness  insurance  funds  necessary  medical 
and  hospital  treatment  is  provided  for  all  wage 
earners  who  fall  ill,  and  regular  allowances  pro- 
portioned to  wages  are  paid  so  long  as  the  inca- 
pacity to  earn  wages  continues.  In  the  event  of 
death,  burial  expenses  are  paid,  and  changes  in  the 
law  now  under  consideration  will  soon  provide 
pensions  for  widows  and  orphans. 

England  has  attacked  the  problem  in  a  different 
way.  The  amended  workmen's  compensation  act, 
passed  in  1906  by  the  government  that  has  just 
been  returned  to  power,  provides  that  in  future 
employers  shall  be  required  to  compensate  the 
victims  of  occupational  diseases  in  the  same  way 
that  they  compensate  the  victims  of  accidents. 
This  is  a  perfectly  logical  development  of  the  com- 

[79] 


SOCIAL  INSURANCE 

pensation  principle,  but  there  are  obvious  diffi- 
culties in  determining  what  diseases  are  due  to 
occupations  and  which  of  several  employers  over 
a  term  of  years  should  be  held  responsible  for  them. 
Moreover,  the  English  system,  even  if  developed 
to  the  extreme  of  considering  tuberculosis,  for 
example,  as  an  occupational  disease  of  dust- 
producing  trades,  will  leave  a  large  number  of 
illnesses  unprovided  for.  For  non-occupational 
diseases  England  still  relies  on  voluntary  sick- 
insurance  associations  and  trade-union  benefits. 

In  the  United  States  we  are  still  so  far  from 
^considering  illness  as  anything  beyond  a  private 
misfortune  against  which  each  individual  and 
each  family  should  protect  itself,  as  best  it  may, 
that  Germany's  heroic  method  of  attacking  it  as 
a  national  evil  through  governmental  machinery 
seems  to  us  to  belong  almost  to  another  planet. 
It  is  for  this  reason  that  I  shall  content  myself 
with  outlining  the  social  policy  that  appears  to  me 
to  be  called  for  by  this  problem.  Its  realization 
must,  in  the  nature  of  the  case,  be  gradual,  and 
before  it  is  realized  new  knowledge  may  be  avail- 
able which  will  make  some  other  policy  appear 
preferable. 

Illness,  like  other  evils,  to  which  all  are  exposed 
[80] 


ILLNESS  AND  PREMATURE  DEATH 

but  which  many  escape,  should  be  provided  against 
by  some  method  of  insurance. 

In  the  case  of  clearly  defined  occupationaJdis- 

the     COSt     Of      this     insnranpp 


be  imposedonthe  employer,  who  maY_bfi-»  relied 
it.  t*>  hiff  expenses  of 


pass  it  on  in  higher  prices  to  consumers,  who  should 
pay  it  along  with  the  other  expenses  necessary  to 
the  gratification  of  their  wants. 

Every  encouragement  should  be  given  to  trade 
unions  and  other  voluntary  associations  of  wage 
earners  to  provide  sick-insurance  to  their  members, 
and  such  fraternal  insurance  should  be  as  care- 
fully supervised  by  the  state  in  the  interest  of 
policy  holders  as  are  commercial  insurance  com- 
panies. 

Experience  indicates  that  voluntary  insurance 
will  not  be  paid  for  by  those  who  need  it  most. 
No  complete  solution  of  this  problem  can  be 
attained  without  making  insurance  against  illness 
obligatory  in  some  such  way  as  Germany  and 
several  other  European  countries  have  done. 
Our  efforts  should  be  directed  toward  educating 
public  opinion  to  form  clear  conceptions  of  what 
the  cotfimon  welfare  requires  in  this  as  in  other 
fields,  And  toward  breaking  down  the  prejudice 

[  81  ] 


SOCIAL  INSURANCE 

which    now    opposes    community    action    where 
community  action  is  so  obviously  desirable. 

In  advocating  workmen's  compensation  for 
industrial  accidents  and  obligatory  illness  insur- 
ance, I  have  said  nothing  as  yet  about  the  reac- 
tion of  these  policies  on  accident  and  illness  pre- 
vention. It  is  here  that  we  have  one  of  the 
strongest  arguments  in  their  favor.  Accidents 
and  illness  are  largely  preventable.  Requiring 
employers  to  compensate  the  victims  of  all  acci- 
dents inspires  them  with  a  zeal  for  accident  pre- 
vention that  they  can  hardly  be  expected  to  dis- 
play under  our  system  of  employers'  liability.  In 
a  similar  way,  requiring  all  persons  who  may  be 
well  to  contribute  to  funds  for  the  relief  of  those  who 
are  ill  gives  every  one  a  new  interest  in  the  prob- 
lem of  national  health.  Our  life  insurance  com- 
panies are  already  doing  much  to  keep  down  the 
death  rate.  If  we  were  all  under  the  necessity  of 
insuring  ourselves  against  illness  as  well  as  death, 
it  will  be  appreciated  what  a  lively  interest  we 
should  develop  in  the  health  of  our  neighbors. 
Every  forward  step  in  the  campaign  for  national 
health  would  be  reflected  in  a  fall  in  the  insurance 
premiums  which  we  were  required  to  pay.  This 
would  be  an  item  in  the  cost  of  living,  and  the  same 

[82] 

c 


ILLNESS  AND  PREMATURE  DEATH 

enthusiasm  could  be  aroused  over  efforts  to  get 
pure  water,  pure  milk,  and  pure  air  for  all  the 
people  that  rallied  to  the  support  of  the  demand 
for  eighty-cent  gas  in  New  York  City  a  few  years 
ago,  or  that  is  now  spending  itself  in  a  nation-wide 
meat  strike. 


183] 


CHAPTER   IV 

UNEMPLOYMENT:    CAUSES  AND   REME- 
DIES 

OF  all  the  evils  that  befall  the  capable  and 
industrious  wage  earner,  none  seems  so  cruel 
and  unjust  as  \nx£mploy^ient.  To  be  willing  and 
anxious  to  work,  and  to  be  unable  to  find  remu- 
nerative work  to  do,  is  in  itself  a  hardship.  To 
have  a  family  dependent  on  one's  earnings,  and 
young  children  actually  in  need  of  food,  makes 
this  hardship  a  bitter  wrong.  More  good  men 
have  been  transformed  into  embittered  advocates 
of  social  revolution  by  unemployment  than  by 
any  other  single  cause. 

In  the  jargon  of  economics,  unemployment 
signifies  an  oversupply  of,  or,  what  is  the  same 
thing,  an  underdemand  for,  labor.  The  time 
was,  no  doubt,  when  it  was  possible  to  believe 
that  this  oversupply  could  not  affect  really  effi- 
cient and  industrious  workmen.  The  statement, 

[84] 


UNEMPLOYMENT 

"any  capable  man  who  really  wants  work  can 
always  find  it,"  is  even  still  sometimes  heard. 
No  doubt  at  one  time  in  this  country  it  was  sub- 
stantially true.  To  continue  to  believe  it  now, 
however,  is  to  betray  one's  ignorance  of  the  in- 
dustrial conditions  that  surround  us.  Not  only 
during  periods  of  depression,  like  that  this  coun- 
try has  recently  passed  through,  is  there  an  over- 
supply  of  labor,  but  in  a  period  of  active  pros- 
perity like  the  present  there  is  an  oversupply  of 
some  kinds  of  labor,  and  workmen  fitted  to  do 
certain  forms  of  work  cannot  find  remunerative 
employment.  And  this  situation  is  not  relieved 
by  the  fact  that  skilled  workers  may  turn  to  less 
skilled  or  unskilled  occupations.  In  the  end 
this  merely  serves  to  swell  the  ranks  of  the  un- 
skilled casual  laborers,  and  of  this  class  it  is  no 

•^ 

exaggeration  to  say  that  there  is  always  an  over- 
supply. 

During  the  winter  it  is  necessary  from  time  to 
time  to  employ  thousands  of  men  in  removing 
snow  from  the  streets  of  New  York.  It  is  inter- 
esting to  consider  what  these  thousands  of  men, 
who,  even  in  periods  of  unusual  industrial  ac- 
tivity, are  available  for  this  quite  temporary 
service,  do  between  times.  Those  familiar  with 

[85] 


SOCIAL  INSURANCE 

their  situation  know  that  their  whole  lives  are 
made  up  of  just  such  temporary  employments. 
They  have  no  permanent  or  settled  occupation. 
In  the  winter  they  come  to  New  York  because 
there  is  nothing  for  them  to  do  in  the  country; 
in  the  summer  most  of  them  go  to  the  country  and 
find  employment  in  various  manual  occupations, 
—  but  always  temporary  and  always  chang- 
ing. 

In  saying  that  there  is  always  an  oversupply  of 
casual  labor,  I  do  not  mean  to  dispute  the  eco- 
•  nomic  principle  that  the  wants  of  wage  earners 
themselves  create,  in  a  roundabout  way,  a  de- 
mand for  their  labor*  In  general,  it  is  undoubt- 
edly true  that  the  requirements  of  every  stomach 
call  for  the  labor  of  the  accompanying  pair  of 
hands.  The  trouble  is  that,  as  industry  is  now 
organized,  there  are  a  large  number  of  occupa- 
v  tions  which  require  labor  intermittently  because 
the  volume  of  production  called  for  is  highly 
irregular.  Snow  removal  from  city  streets  is  only 
an  extreme  illustration  of  a  type  of  occupation 
that  is  unfortunately  common.  Similarly  irregu- 
lar is  the  demand  for  stevedores  to  load  and 
unload  the  vessels  whose  coming  and  going  con- 
tribute so  largely  to  the  industrial  importance  of 

[86] 


UNEMPLOYMENT 

New  York.  In  New  York,  vessels  come  and  go 
the  year  around.  Along  the  Great  Lakes  and 
the  canals  which  connect  them  with  the  seaboard, 
the  occupation  of  the  stevedore  or  longshoreman 
is  confined  to  a  period  of  seven  or  eight  months. 
The  irregularity  of  agricultural  employment  is 
equally  striking.  The  winter's  dullness  is  suc- 
ceeded in  the  spring  by  active  preparations  for 
the  summer's  crops.  This  activity  abates  some- 
what during  the  summer,  but  only  to  be  succeeded 
by  more  feverish  industry  in  the  autumn,  when 
the  various  products  must  be  harvested  and  har- 
vested promptly,  if  the  fruits  of  the  year's  in- 
dustry are  to  be  fully .  enjoyed.  Returning  to 
city  industries,  the  clothing  trades,  as  is  well 
known,  are  subject  to  great  irregularity.  The 
shirt-waist  makers'  strike  in  1910  brought  out 
in  a  forcible  way  this  aspect  of  that  one  industry. 
Both  employers  and  employees  agreed  that  over- 
time during  the  rush  season  from  January  to  June 
and  extreme  dullness  from  June  to  September 
were  the  worst  features  of  the  shirt-waist  makers' 
lot.  And  in  these  characteristics  the  shirt-waist 
industry  is  typical  of  the  garment  and  clothing 
trades  generally.  The  building  trades  present  a 
similar  irregularity,  —  great  activity  in  spring, 


SOCIAL  INSURANCE 

summer,  and  autumn,  and  comparative  dullness 
during  the  cold  winter  months.1 

This  irregularity  of  industry  is  reflected  in  the 
statistics  published  by  the  Department  of  Labor 
in  regard  to  the  percentage  of  members  of  trade 
unions  that  are  unemployed  in  New  York  State  in 
different  months  in  the  year.  In  the  building 
and  stone-working  trades,  the  percentage  of  un- 
employment ranges  from  35  per  cent  in  January, 
when  building  operations  are  most  interfered  with, 
to  only  10  per  cent  in  September.  The  clothing 
and  textile  industries  show  almost  as  great  a 
range  of  variation.  In  a  few  trades,  on  the  other 
hand,  steady  work  for  all  competent  hands  is  the 
rule.  Among  the  printers,  less  than  three  more 
men  in  every  hundred  are  unemployed  in  June, 
the  dull  month,  than  in  March,  the  month  of 
greatest  activity.  The  stationary  engineers  show 
almost  no  variation  in  employment  from  season 
to  season,  the  proportion  running  along  between 
2  and  3  per  cent  continuously. 

Combining  the  trade-union  figures,  it  appears 
that  for  the  100,000  odd  members  to  which  they 

1  In  London,  where  the  winters  are,  of  course,  less  severe  than 
in  New  York,  recent  investigations  seem  to  show  that  the 
building  trades  should  no  longer  be  characterized  as  seasonal 
employments. 

[88] 


UNEMPLOYMENT 

refer  there  is  a  variation  in  the  extent  of  unem- 
ployment from  15  per  cent  in  midwinter  to  not 
over  5  per  cent  in  the  autumn  months.  During 
the  depression  in  1907  and  1908,  the  proportion 
of  unemployment  increased  to  over  35  per  cent  in 
January,  February,  and  March,  1908,  and  was  at 
no  time  less  than  20  per  cent  from  November, 
1907,  to  April,  1909.1 

The  variable  requirements  of  industry  as  now 
organized  are  shown  similarly  by  the  manufactur- 
ing census.  The  figures  for  New  York  State,  for 
1900  and  1905,  indicate  that  only  90  per  cent  of 
the  number  of  persons  employed  in  manufactur- 
ing industries  in  October,  the  month  of  greatest 
activity,  were  employed  in  January.  In  1905, 
this  meant  a  variation  of  over  85,000  in  the  num- 
ber of  persons  employed  at  the  two  periods. 

It  is  this  irregularity  in  the  requirements  of 
industry  from  month  to  month  that  is  the  chief 
cause  of  unemployment.  From  it  results  the 
necessity  under  which  so  many  wage  earners  find 
themselves,  either  of  being  idle  or  of  seeking  em- 
ployment in  some  different  occupation  from  that 
to  which  they  have  been  accustomed.  In  conse- 

1  These  satistics  and  some  of  the  others  quoted  are  extracted 
from  an  unpublished  report  by  Mr.  William  M.  Leiserson. 

[89] 


SOCIAL  INSURANCE 

quence  of  it,  there  are  reserve  forces  of  labor  in 
connection  with  every  irregular  industry  which, 
in  the  aggregate,  constitute  a  considerable  army 
of  unemployed  men  and  women,  even  in  years 
of  active  trade. 

How  these  reserve  forces  of  labor  are  kept  in 
existence  may  be  illustrated  by  reference  to  the 
situation  in  connection  with  the  London  docks,  — 
a  situation  not  very  different,  I  am  informed, 
from  that  presented  by  the  current  method  of 
employing  longshoremen  in  New  York.  Until 
recently,  the  custom  of  hiring  dockers  in  London 
was  to  pick  out  from  the  surging  crowd  of  candi- 
dates for  employment  that  presented  itself  every 
morning  the  number  that  happened  to  be  needed 
during  the  day.  An  investigation  showed  that 
the  aggregate  demand  of  the  wharves  in  a  par- 
ticular section  of  the  city,  adding  together  the 
maximum  number  needed  on  any  day  of  the  year 
at  each  wharf,  called  for  more  than  21,000  men. 
As  a  matter  of  fact,  in  the  year  investigated,  the 
wharves  never  employed  on  any  single  day  as  many 
as  18,000  men;  the  average  was  about  15,000,  and 
on  the  slackest  day  the  number  needed  was  only 
10,000.  In  order  to  insure,  however,  an  adequate 
labor  supply,  the  dock  managers  constantly  varied 

[90] 


UNEMPLOYMENT 

the  men  employed.  Considerably  more  than  the 
21,000  men  who  might  have  been  required,  had 
the  days  of  greatest  activity  at  all  the  wharves 
coincided,  were  led  to  depend  on  the  chance  of  get- 
ting work  at  the  docks  for  a  livelihood.  At  best, 
less  than  three  fourths  of  these  men  could  be  em- 
ployed on  the  average,  and  at  times  the  work  was 
insufficient  to  occupy  as  many  as  one  half  of  them. 

Applying  the  same  method  of  estimating  the 
extent  of 'the  variation  in  the  demands  of  manu- 
facturing industries  to  the  census  figures  of  1905 
for  New  York  State,  we  find  that  the  difference 
between  the  maximum  requirements  of  all  manu- 
facturing industries  and  their  minimum  require- 
ments was  not  less  than .  300,000.  This  does  not 
mean,  of  course,  that  of  the  900,000  odd  persons 
employed  in  manufacturing  at  the  height  of  the 
busy  season  one  third  were  idle  at  the  dull  season. 
It  does  mean,  however,  that  to  satisfy  the  require- 
ments of  our  manufacturing  industries  at  least 
300,000  persons  were  either  unemployed  or  forced 
to  change  from  one  employment  to  another  dur- 
ing the  year. 

Every  irregular  demand  for  labor  which  secures 
its  labor  supply  by  requiring  those  who  are  in  search 
of  work  to  present  themselves  from  time  to  time 

[91] 


SOCIAL  INSURANCE 

on  the  chance  of  securing  it  —  and  this  is  the  usual 
method  of  recruiting  labor  in  New  York  City  - 
tends  to  keep  in  existence  a  reserve  supply  of  labor, 
all  of  which  can  never  be  employed.  How  large 
this  reserve  army  of  the  unemployed  and  irregu- 
larly employed  is  in  this  state,  there  is  no  means  of 
knowing.  That  it  is  very  large,  however,  and  that 
in  this  characteristic  of  modern  industry  we  have 
the  explanation  of  the  growing  seriousness  of  the 
problem  of  unemployment,  all  students  of  the 
question  agree. 

The  foregoing  analysis  of  the  industrial  causes  of 
unemployment  suggests  that  the  first  step  toward 
the  solution  of  the  problem  is  a  better  organization 
v  and  correlation  of  our  industries.  This  better 
organization  must  have  two  ends  in  view:  (1)  to 
reduce,  as  much  as  possible,  the  present  variations 
in  the  demand  for  labor  by  particular  indus- 
tries; (2)  to  make  these  irregular  demands  dovetail 
into  each  other  so  that  the  surplus  labor  of  one 
industry  will  serve  as  the  reserve  labor  force  of 
some  other.  The  first  change  can  only  be  brought 
about  by  the  combined  efforts  of  consumers,  em- 
ployers, and  employees.  The  second  calls  for  a 
thoroughgoing  organization  of  the  country's  labor 

[92] 


UNEMPLOYMENT 

market  that  will  be  as  effective  in  distributing  the 
available  labor  force  where  it  is  most  needed  as 
our  banks  are  in  distributing  capital  where  it  is 
most  required.  Each  one  of  these  needs  merits 
•fuller  consideration. 

It  is  not  too  much  to  say  that  the  present  indus- 
trial organization  of  the  United  States  is  wasteful, 
unintelligent,  and  even  chaotic.  Consumers,  as  a 
rule,  give  little  thought  to  the  interests  of  producers 
in  making  their  purchases.  At  certain  seasons 
of  the  year  new  wants  are  felt,  and  we  all  flock  to 
the  stores  to  have  these  wants  gratified.  The 
disastrous  results  for  storekeepers  and  those  they 
employ  at  that  season  of  the  year,  Christmas,  when 
consideration  for  others  should  be  at  a  maximum  in 
a  Christian  community,  has  been  forcibly  brought 
to  our  attention  through  the  efforts  of  the  Con- 
sumer's League.  But  admonitions  to  "shop  early" 
are  not  needed  only  at  Christmas  time.  They 
should  be  equally  heeded  in  the  autumn  in  connec- 
tion with  the  purchase  of  winter  clothes,  and  in  the 
spring  in  relation  to  the  acquisition  of  Easter  bon- 
nets. For  behind  the  health-destroying  pressure 
that  none  of  us  can  overlook  as  we  do  our  Christ- 
mas shopping  is  a  corresponding  pressure  on  those 
who  turn  out  products  for  which  there  is  a  seasonal 

[93] 


SOCIAL  INSURANCE 

demand.  It  is  probably  too  much  to  expect  that 
many  consumers  can  be  influenced  to  change  their 
shopping  habits,  but  every  new  recruit  helps  a 
little  to  substitute  regularity  and  order  for  irregu- 
larity and  chaos.  Every  man,  and  even  more, 
every  woman  —  for  women  are  the  chief  offenders 
in  this  department  —  who  stands  out  for  simplicity 
in  dress  and  independence  of  the  vagaries  of  fash- 
ion contributes  something  toward  a  better  indus- 
trial organization. 

The  contribution  that  employers  can  make  to- 
ward the  steadying  of  our  industries  is  obvious. 
By  deciding  earlier  what  and  how  much  they  will 
produce,  by  combining  processes  so  that  the  labor 
force  not  needed  in  one  in  the  slack  season  can  be 
turned  into  the  other,  —  as  is  the  case  with  the 
coal  and  ice  dealer,  —  and  by  resisting  the  temp- 
tation to  crowd  work  by  requiring  overtime,  they 
can  do  much  to  make  production  regular  and  con- 
tinuous through  the  year,  instead  of,  as  at  present 
in  so  many  industries,  feverishly  active  at  certain 
seasons  and  almost  stagnant  at  others. 

Most  of  all  is  to  be  expected  from  the  intelligent 
cooperation  of  employees.  They  are  the  ones  who 
suffer  most  through  the  irregularities  of  industry. 
By  standing  together  to  insist  on  no  overtime  or 

[94] 


UNEMPLOYMENT 

high  pay  for  overtime,  as  in  the  shirt-waist  makers' 
strike  or  in  the  Bethlehem  Steel  Company's  ma- 
chinists' strike  in  1910,  tEey  can  force  employers 
to  plan  production  with  more  regard  to  the  social 
interests  at  stake,  and  the  changes  that  they 
can  bring  about  will,  in  the  long  run,  be  as  ad- 
vantageous to  employers  and  to  the  public  as 
to  themselves.  Intelligent  public  opinion  should 
'  back  them  up  in  such  demands,  and  where  it  is 
impossible  to  mitigate  the  evils  of  excessive  over- 
time by  cooperative  effort,  intelligent  legislation 
should  be  called  in  to  insist  that  the  health  and 
vitality  of  the  nation's  workers  are  more  important 
than  cheap  goods  or  the  execution  of  orders  in 
record  breaking  time. 

Though  much  may  be  done  toward  steadying 
production  through  the  combined  efforts  of  con- 
sumers, employers,  and  employees,  the  variations 
of  seasons  and  other  causes  will  continue  to  make 
some  industries  irregular.  To  reduce  to  a  mini- 
mum the  unemployment  that  results  from  these 
irregularities,  we  must  organize  the  labor  market. 
As  regards  capital  and  the  staples  on  which  the 
world  depends  for  the  gratification  of  its  wants, 
the  organization  of  markets  has  been  carried  to 
a  high  degree  of  efficiency.  Only  the  first  timid 

[95] 


SOCIAL  INSURANCE 

steps  have  been  taken  toward  the  organization  of 
the  labor  market.  No  one  fact  so  clearly  reveals 
the  defects  in  the  present  situation  as  that  the 
employer  who  wants  more  hands  usually  resorts 
to  the  method  of  inserting  a  sign  in  his  window 
or  an  advertisement  in  the  newspaper.  In  nearly 
every  other  department  of  modern  economic 
life  the  seller  displays  his  wares  and  the  buyer 
comes  after  them.  As  regards  labor,  the  common 
practice  in  the  United  States  is  for  the  buyer  to 
announce  his  needs  and  to  throw  upon  the  seller, 
the  workman,  all  the  trouble  and  expense  and  loss 
of  time  and  earnings  necessary  to  respond  to  these 
needs.  From  this  point  of  view,  the  familiar  sign, 
"Boy  wanted,"  goes  to  the  heart  of  the  problem 
of  unemployment. 

It  is  not  necessary  for  me  to  enlarge  in  this  book 
upon  the  need  for  a  series  of  cooperating  labor 
bureaus  or  labor  exchanges,  to  bring  about  a  bet- 
ter distribution  of  labor  force  in  the  United  States. 
This  was  one  of  the  principal  contentions  of  Dr. 
Devine  in  discussing  the  problem  of  the  man  "Out 
of  Work,"  in  the  Kennedy  Lectures  for  1909,  pub- 
lished in  this  same  series,  and  I  can  add  little  to 
his  argument.1  Largely  as  a  result  of  his  study  of 
1  Misery  and  Its  Causes,  Chap.  III. 
[96] 


UNEMPLOYMENT 

the  problem,  the  National  Employment  Ex- 
change was  incorporated  in  this  city  a  year  ago, 
and  that  exchange  now  has  a  department  for 
mercantile  labor  in  addition  to  the  department 
for  manual  labor  originally  opened.  A  similar 
and  older  labor  exchange  for  women  and  girls  is 
the  Alliance  Employment  Bureau.  Both  of  these 
exchanges  are  doing  valuable  and  useful  work,  but 
those  who  direct  them  would  be  the  first  to  admit 
that  they  ha!ve  as  yet  touched  only  one  small 
corner  of  the  field  that  lies  before  them.  To  ac- 
complish the  principal  object  for  which  public 
or  philanthropic  labor  exchanges  exist,  that  is,  to 
connect  men  and  women  who  are  out  of  employ- 
ment quickly,  and  with  a  minimum  of  expense  to 
'  themselves,  with  the  employers  who  most  need 
and  will  pay  best  for  their  services,  it  is  absolutely 
necessary  that  such  exchanges  should  have  a  com- 
prehensive grasp  of  the  situation.  What  we  must 
aim  at  as  our  goal  in  connection  with  organizing 
the  labor  market  is  what  Germany  has  already 
accomplished  by  her  chain  of  connected  and  co 
operating  labor  bureaus  throughout  the  Empire.1 

1  The  most  interesting  of  the  German  Employment  Bureaus 
is  the  so-called  Central  Labor  Bureau  (Central  Areibtsnach- 
weis)  in  Berlin.  This  was  started  some  twenty-five  years  ago 

[97] 


SOCIAL  INSURANCE 

After  prolonged  study  of  the  question,  all  parties 
in  the  United  Kingdom  have  come  to  this  con- 
clusion. During  February,  1910,  100  public 
labor  exchanges  were  opened  in  different  parts 
of  Great  Britain,  and  before  August  1,  1910, 
the  government  is  pledged  to  open  150  more. 
These  are  to  keep  card  registries  of  all  appli- 
cants for  work,  to  be  in  constant  communication 
with  one  another,  so  that  each  shall  have  daily 
information  in  regard  to  the  state  of  the  labor 
market  in  every  part  of  the  Kingdom,  and  to 

by  a  private  association.  The  value  of  its  work  was  soon 
appreciated  by  public  authorities,  and  since  1902  it  has  oc- 
cupied a  specially  erected  series  of  buildings  of  its  own  in 
Gormannstrasse,  and  receives  an  annual  subsidy  of  $7500 
from  the  municipality.  The  following  description  is  taken 
from  Dawson's  The  German  Workman  (pp.  9-10):  "There 
are  two  separate  buildings  —  one  for  unskilled  work  people, 
the  other  for  female  employees  and  the  trade  guilds  which  are 
affiliated  to  the  bureau.  To  the  former  building  belong,  be- 
sides the  formal  registration  offices  and  residential  quarters  for 
the  attendants,  a  large  assembly  hall,  to  which  work  seekers 
are  able  to  resort  during  the  day,  with  galleries  which  alone 
seat  1400  persons,  a  reading  room  supplied  with  books  and 
newspapers,  a  canteen,  workrooms  for  tailors  and  shoemakers, 
in  which  repairs  are  made  at  the  all-round  charge  of  just  over 
a  penny,  a  miniature  hospital,  with  a  series  of  bathrooms  below 
in  which  hot,  cold,  and  shower  baths  can  be  had  at  all  hours 
of  the  day  for  a  halfpenny. 

"  In  the  large  assembly  hall,  the  vacant  situations  are  called 
out  at  fixed  intervals  in  the  hearing  of   the  assembled  work 

[98] 


UNEMPLOYMENT 

cooperate  in  transporting  workers  promptly  from 
places  where  they  are  not  needed  to  places  where 
they  are  needed.  One  of  the  first  benefits  that  the 
government  expects  to  derive  from  these  exchanges 
is  accurate  knowledge  in  regard  to  the  extent  and 
causes  of  unemployment.  For  it  is  a  remarkable 
fact  that,  notwithstanding  the  great  amount  of 
attention  that  has  been  given  to  the  problem  in 
England  during  the  last  ten  years,  this  informa- 
tion is  still  lacking.  The  English  Poor  Law  Com- 
mission, which  was  directed  to  investigate  unem- 
ployment along  with  other  aspects  of  poverty, 
was  forced  to  admit  in  its  recently  published  report 
that:  "We  have  found  ourselves  unable  to  answer 
two  elementary  questions.  There  are  no  statistics 

seekers,  and  from  the  number  of  those  who  offer  themselves 
the  director  chooses  the  most  suitable,  though,  other  things 
equal,  he  gives  the  preference  to  married  men  or  men  who 
have  waited  longest  for  work.  At  the  canteen  nutritious  food 
is  served  in  return  for  coupons  issued  by  the  guild  registries  as 
well  as  for  direct  payment.  Over  100,000  portions  of  food 
are  sold  during  the  year.  There  are  separate  departments  for 
workmen  over  sixteen  years  and  for  juveniles,  so  that  contact 
between  the  two  is  unnecessary.  The  accommodation  for 
female  work  seekers  and  for  the  trade  guilds  is  in  its  way  no 
less  complete.  For  the  former  a  large  room,  capable  of  hold- 
ing 375  persons  comfortably,  and  having  its  own  entrance 
from  the  outside,  is  set  apart,  while  to  each  of  the  guilds  a 
separate  set  of  rooms  is  allotted  —  offices,  waiting-rooms,  etc. 
—  with  a  canteen  for  common  use." 

[99] 


SOCIAL  INSURANCE 

available  which  enable  us  to  compute,  even  within 
hundreds  of  thousands,  how  many  persons  are 
at  any  one  time  simultaneously  in  distress  from 
unemployment;  or  whether  this  number  is  or  is 
not  greater,  relatively  or  absolutely,  than  the  corre- 
sponding numbers  for  other  countries,  or  for  our 
own  country  at  previous  times."  1  This  same  diffi- 
culty of  getting  at  the  facts  has  been  encountered,  it 
is  hardly  necessary  to  state,  by  the  New  York  Com- 
mission on  Employers'  Liability  and  Unemployment. 
Whether  in  this  country  we  shall  be  able  to 
organize  the  needed  chain  of  cooperating  employ- 
ment bureaus,  to  act  as  an  efficient  clearing 
house  for  labor,  through  private  philanthropy, 
it  is  perhaps  too  early  to  predict.  Our  experience 
with  public  bureaus,  particularly  in  this  state,  has 
not  been  calculated  to  prejudice  us  in  their  favor. 
On  the  other  hand,  the  task  to  be  accomplished  is 
so  big  that  it  is  difficult  to  believe  that  philan- 
thropic effort  can  do  more  than  point  the  way  and 
educate  opinion  as  to  the  methods  to  be  employed, 
until  the  state  is  prepared  to  grapple  with  it  on  an 
adequate  scale  and  with  clear  appreciation  of  the 
great  public  purpose  to  be  accomplished. 

1  Report  of  the  Royal  Commission  on  the  Poor  Laws  and 
Belief  of  Distress,  1909. 

[100] 


UNEMPLOYMENT 

When  such  labor  exchanges  are  established,  and 
bepome,  as  have  the  German  exchanges,  the  gener- 
ally accepted  link  of  communication  between  em- 
ployers and  employees,  the  following  advantages 
may  confidently  be  expected  from  them:  — 

(1)  Wage  earners  will  be  spared  the  costly  and 
disheartening  search  for  work  which  now  bears  so 
heavily  upon  them  whenever  they  are  forced  to 
change  their  employment. 

(2)  The  reserve  force  of    irregularly  employed 
labor  which  results  from  the  present  organization 
of  industry  will  be  greatly  reduced,  if  not  entirely 
eliminated. 

(3)  Employers   will  be  assisted   to  secure  just 
the  quality  of  labor  which  they  require,  and  re- 
lieved of  the  necessity  of  taking  on  new  men  on 
the  basis,  solely,  of  their  own  representations  and 
"trying  them  out,"  often  only  to  discharge  them 
at  the  end  of  the  first  day  or  the  first  week. 

(4)  An   enumeration   and   classification    of    the 
unemployed  will  be  made.     At  least  three  types 
are  now  commonly  encountered  in  any  group  of  the 
unemployed:    (a)  competent  and  industrious  men, 
temporarily  out  of  work;    (&)  inefficient  workers, 
who  are  usually  unemployed  during  dull  seasons; 
(c)  the  class  which,  for  physical  or  moral  reasons, 

[101] 


SOCIAL  INSURANCE 

is  incapable  of  doing  steady  work.  To  have  these 
types  distinguished,  and  the  number  in  the  last 
class  —  the  unemployables  —  determined,  will  be  a 
great  gain. 

(5)  The  presence  of  such  labor  exchanges  will 
serve  to  put  a  stop  to  the  demoralizing  methods 
of  caring  for  the  unemployed  now  practiced.  The 
street  vagrant  could  no  longer  plausibly  plead 
inability  to  find  work.  Relief  works  of  various 
kinds,  which  are  now  nibbling  away  at  this  or  that 
corner  of  the  problem  of  unemployment,  if  still 
regarded  as  desirable,  could  be  coordinated  and 
put  in  a  position  to  offer  work  to  the  bona  fide 
unemployed  certified  to  them  by  the  labor  ex- 
changes. 

Important  as  are  labor  exchanges,  it  would  be 
visionary  to  regard  their  organization  as  more  than 
a  step  toward  the  solution  of  the  problem  of 
unemployment.  They  may  reduce  the  problem 
to  its  lowest  terms  and  supply  the  information 
needed  to  guide  subsequent  steps.  Beyond  this 
they  cannot  go. 

Even  before  we  are  provided  with  an  adequate 
system  of  labor  exchanges,  we  must  seriously  con- 
sider other  measures  that  may  be  taken  to  miti- 
[102] 


UNEMPLOYMENT 

gate  the  present  situation.  A  complicating  circum- 
stance that  opposes  all  efforts  to  help  the  bonafide 
omemployed  is  the  presence  in  the  community  of 
tramps  and  vagrants.  Sympathy  for  this  unfor- 
tunate type  of  humanity  should  not  blind  us  to 
the  fact  that,  socially,  their  unwillingness  to  en- 
gage in  any  form  of  honest  labor  is  a  crime  that 
must  be  dealt  with  in  a  way  that  will  prove  repres- 
sive as  well  as  corrective.  For  the  second  time 
there  has  been  introduced  in  the  legislature  in 
Albany  this  winter  a  bill  providing  a  state  indus- 
trial and  farm  colony  for  vagrants,  to  which  they 
may  be  sent  on  indeterminate  sentences  to  be 
trained  out  of  their  bad  habits,  in  the  same  way 
that  we  try  through  our  industrial  schools  to  re- 
claim youthful  criminals.  This  bill  embodies  the 
matured  views  of  those  who  have  given  most  atten- 
tion to  the  problem  of  vagrancy  in  this  state.  So 
far  as  I  know,  the  opposition  to  it  last  winter  was 
based  either  on  misunderstanding  or  indifference. 
If  it  becomes  a  law,  we  have  every  reason  to  antici- 
pate that  it  will  lead  to  the  gradual  weeding  out  of 
the  tramp  type  from  the  miscellaneous  horde  that 
now  confronts  us  whenever  we  think  of  the  unem- 
ployed. This  has  been  the  result  of  similar  policies 
abroad,  and  there  seems  nothing  in  our  American 
[103] 


SOCIAL  INSURANCE 

situation  that  would  stand  in  the  way  of  a  similar 
accomplishment  here.  It  will  do  this  in  part  by 
making  a  life  of  vagrancy  a  thoroughly  undesirable 
one.  The  certainty  of  arrest  and  commitment  to 
an  industrial  colony  would  deter  many  young  men 
who  are  now  attracted  by  the  tramp's  seemingly 
care-free  existence  from  ever  entering  upon  it. 
Those  who  were  not  deterred  from  the  attempt  to 
live  without  work,  by  such  a  policy,  would  in  due 
course  be  sent  to  the  farm  colony,  and  there  get 
the  benefit  of  training  in  habits  of  industry.  In 
Denmark  they  have  developed  a  system  of  graded 
farm  and  industrial  colonies.  The  residents  are  paid 
for  their  work,  and  at  an  increasing  rate  as  they  gain 
in  efficiency.  So  soon  as  they  prove  themselves 
capable  of  self-support  and  seem  disposed  to  give 
up  the,  vagrant  life,  they  are  allowed  to  go  out  in 
search  of  work.  They  are  only  discharged  finally 
when  they  actually  secure  employment.  If  they 
justify  the  confidence  imposed  in  them,  they  have 
a  good  chance  to  get  on.  If  they  fall  by  the  way, 
and  are  recommitted  to  the  industrial  colony, 
they  must  begin  again  at  the  bottom  and  again 
work  out  their  salvation.  Under  this  plan  it  is 
said  that  not  only  are  there  no  tramps  at  large  in 
Denmark,  but  that  of  those  who  attempt  to  live 
[104] 


UNEMPLOYMENT 

without  work  and  are  sent  to  the  colonies  a  grati- 
f yingly  large  number  are  won  back  to  habits  of  self- 
respect  and  self-support.  It  will  be  a  happy  day 
when  the  same  can  be  said  of  New  York  and  the 
other  states  of  the  Union! 

To  legislate  vagrants  into  suitable  detention 
colonies  appears  to  me  to  be  a  wise  step,  but  it  is 
equally  important  to  correct,  so  far  as  we  may, 
the  conditions  that  create  vagrants.  We  must 
all  agree  that  the  chief  of  these  conditions  is  the 
absence  of  suitable  industrial  training  for  boys 
and  girls.  The  members  of  the  English  Poor  Law 
Commission  may  never  have  heard  the  aphorism 
that  "the  prematurely  employed  child  is  the  father- 
of  the  man  without  a  job,"  but  they  offer  abundant 
evidence  in  proof  of  this  paternity.  Their  report 
declares  that:  "In  large  towns,  boys,  owing  to 
carelessness  or  selfishness  on  the  part  of  parents, 
or  their  own  want  of  knowledge  and  forethought,  — 
for  the  parents  often  have  very  little  voice  in 
the  matter,  —  plunge  haphazard,  immediately  on 
leaving  school,  into  occupations  in  which  there  is 
no  future.  .  .  .  According  to  the  main  statistical 
sources  of  information  available,  the  very  serious 
fact  emerges  that  between  70  per  cent  and  80  perr 
cent  of  boys  leaving  elementary  schools  enter  un- 
[105] 


SOCIAL  INSURANCE 

skilled  occupations.  .  .  .  The  problem  owes  its 
rise,  in  the  main,  to  the  enormous  growth  of  cities 
as  distributive  centers,  —  chiefly  and  most  disas- 
trously, London,  —  giving  innumerable  openings 
for  errand  boys,  milk  boys,  office  and  shop  boys, 
bookstore  boys,  van,  lury,  and  trace  boys,  street 
sellers,  etc.  In  nearly  all  of  these  occupations  the 
training  received  leads  to  nothing,  and  the  occupa- 
tions themselves  are  in  most  cases  destructive  to 
healthy  development,  owing  to  long  hours,  long 
periods  of  standing,  walking,  or  mere  waiting,  and 
morally  are  wholly  demoralizing."  That  a  similar 
tendency  prevails  in  New  York  City  is  evident  to 
any  one  who  has  studied  the  occupations  to  which 
boys  and  girls  are  attracted  as  soon  as  they  take 
out  their  working  papers.  Thinking  only  of  the 
wages  they  can  earn,  and  choosing  such  cul  de 
sac  employments  as  the  English  Commission  enu- 
merates, a  large  proportion  of  them  never  become 
skilled  workers,  and  drift,  as  they  grow  older,  into 
the,  unskilled  casual  employments  on  which  the 
irregularity  of  modern  industry  presses  most 
heavily.  In  the  last  chapter  I  shall  return  to 
the  question  of  industrial  education,  but  I  think 
it  will  be  admitted  without  argument  that  an  im- 
portant role  must  be  assigned  to  it  in  trying  to 
[106] 


UNEMPLOYMENT 

correct  the  conditions  that  lie  behind  the  problem 
of  unemployment. 

In  nearly  all  discussions  of  unemployment  the 
phenomenon  is  treated  as  an  unmixed  evil.  It 
may  be  well  at  this  point  to  ask  ourselves  why  the 
man  who  loses,  on  the  average,  five  or  even  ten 
per  cent  of  his  working  time  in  the  course  of  a 
year  should  be  considered  an  object  of  pity.  For 
wage  earners,  the  only  way  to  secure  a  holiday,  as 
a  rule,  except  the  few  holidays  prescribed  by  law 
or  custom  in  this  busy  country,  is  to  join  the  ranks 
of  the  unemployed.  Salaried  persons  are  usually 
entitled  to  at  least  two  weeks'  vacation  on  full  pay. 
Some  salaried  persons,  like  school-teachers  and 
college  professors,  enjoy  two  or  three  months'  vaca- 
tion on  full  pay,  and  regard  it  as  the  most  valuable 
part  of  their  compensation.  If  the  only  way  in 
which  the  wage  earner  can  get  a  holiday  for  three 
or  four  weeks  is  to  be  unemployed  for  that  period, 
why  look  upon  unemployment  as  an  evil  ?  The 
answer  to  this  question  is  obvious,  but  its  very 
obviousness  serves  to  emphasize  the  difficulties 
under  which  the  wage  earner  labors.  Unemploy- 
ment is  an  evil  for  him  partly  because  he  can't 
afford  to  take  a  holiday,  but  even  more  because  his 
[  107  L 


SOCIAL  INSURANCE 

holiday  is  embittered  by  anxiety  in  reference  to  his 
next  job.  So  true  is  this  last  statement  that  it  is 
not  unusual  for  wage  earners  to  work  harder  when 
they  are  nominally  unemployed,  looking  for  work, 
than  they  will  be  required  to  work  when  the  coveted 
jobs  are  found. 

This  situation  is  radically  altered  in  organized 
trades  like  the  building  trades,  in  which  the  period 
of  unemployment  comes  at  a  regular  season  every 
year,  and  in  which  high  wages  and  unemployed 
benefits  from  the  union  make  the  dull  season  a 
welcome  respite.  This  suggests  another  solution 
of  the  unemployed  problem  to  which  much  atten- 
tion is  being  given  in  Europe;  that  is,  insurance 
against  unemployment.  In  industries  in  which  the 
usual  percentage  of  unemployment  is  low  and  in 
which  labor  is  organized,  mutual  insurance  against 
unemployment  through  trade-union  unemployment 
benefits  has  long  been  successfully  practiced  in 
Great  Britain.  In  1904,  according  to  a  report 
of  the  Board  of  Trade,  81  of  the  100  principal 
unions  of  the  country,  representing  84  per  cent  of 
the  membership  of  these  unions,  paid  out  in  unem- 
ployed benefits  over  $3,000,000,  or  nearly  one  third 
of  the  total  of  $10,000,000  expended  by  the  unions 
in  that  year.  That  this  form  of  benefit  is  approved 
[108] 


UNEMPLOYMENT 

by  trade-union  sentiment  is  shown  by  the  fact  that, 
according  to  the  Poor  Law  Commission,  the  mem- 
bership of  unions  paying  such  benefits  is  growing 
more  rapidly  than  that  of  unions  not  paying  them. 
On  the  Continent,  various  methods  of  insurance 
against  unemployment  have  been  tried.  On  the 
whole,  reappears  to  be  the  case  that  trade  unions 
have  been  the  only  bodies  which  have  been  able  to 
administer  such  insurance  successfully.  The  fatal 
defect  in  other  than  trade-union  systems  of  insur- 
ance has  been  that  it  has  proved  impossible  to  limit 
the  benefits  to  persons  who  are  involuntarily  idle. 
Where  municipalities  have  tried  to  administer  such 
insurance  requiring  supplementary  contributions 
from  the  insured,  it  has  been  found  that  the  insured 
were  regularly  unemployed  at  least  long  enough  to 
get  back  their  contributions  to  the  common  fund. 
Trade-union  insurance  is  successful  because  the 
members  are  less  apt  to  deal  unfairly  with  one 
another,  and  because  the  union  is  itself  a  sort  of  em- 
ployment bureau,  and  can  apply  the  labor  test  to 
members  who  are  suspected  of  making  a  business  of 
being  unemployed.  Belief  that  this  function  can 
only  be  successfully  performed  by  trade  unions  has 
led  to  the  introduction  of  the  plan,  first  tried  by  the 
town  of  Ghent,  under  which  the  municipality  sup- 
[109] 


SOCIAL  INSURANCE 

plements  the  unemployed  benefits  paid  by  trade 
unions,  which  comply  with  certain  regulations,  out 
of  the  municipal  treasury. 

During  the  recent  campaign  in  the  United  King- 
dom it  was  announced  by  the  Liberal  Ministry 
that  if  it  was  returned  to  power  it  would  establish 
a  system  of  insurance  against  unemployment  which 
would  benefit  at  least  2,500,000  persons.  As  that 
is  about  the  present  membership  of  British  trade 
unions,  and  as  the  Liberal  Ministry  is  favorably 
disposed  to  organized  labor,  it  seems  probable  that 
some  plan  like  that  of  Ghent  is  contemplated. 

Germany,  which  has  been  the  leader  in  devis- 
ing plans  of  workingmen's  insurance  against  other 
evils,  has  thus  far  refrained  from  introducing 
insurance  against  unemployment.  The  govern- 
ment has  stated  from  time  to  time  in  the  Reichstag, 
however,  that  the  matter  was  under  consideration, 
so  some  scheme  of  compulsory  insurance  against 
unemployment  may  yet  be  established. 

In  the  United  States,  as  is  well  known,  trade 
unions  have  been  far  behind  the  British  labor  organi- 
zations in  establishing  benefit  features.  This  has 
been  particularly  true  of  unemployed  benefits. 
In  1905,  not  over  $80,000,  or  about  one  half  of 
one  per  cent  of  the  total  expenditures  of  the  prin- 
[110] 


UNEMPLOYMENT 

cipal  unions,  was  for  this  purpose.  Even  this 
small  expenditure  represents  some  progress,  and 
there  is  every  reason  to  anticipate  that  more  and 
more  attention  will  be  given  to  benefits  here,  as 
has  been  the  case  abroad. 

Insurance  against  unemployment,  where  the  con- 
ditions are  favorable  to  its  operation,  has  every- 
thing to  recommend  it.  It  distributes  a  burden 
which  often  falls  with  crushing  force  on  a  single 
individual,  over  a  larger  group,  which  can  bear  it 
with  comparative  ease.  It  enables  workmen  in 
seasonal  trades  to  look  for^^d  to  the  dull  period 
without  anxiety,  and  encourages  them  to  save,  by 
paying  their  union  dues,  so  that  all  may  meet  the 
period  of  unemployment  without  privation.  Fi- 
nally, it  fosters  a  spirit  of  mutual  helpfulness  and 
mutual  confidence  that  cannot  but  react  favorably 
on  all  of  the  relations  of  life.  It  would  be  prema- 
ture to  commend  the  plan  of  subsidizing  trade 
unions  which  administer  such  benefits  wisely  and 
honestly  out  of  the  public  treasury.  Even  grant- 
ing the  importance  of  the  service  they  perform, 
there  are  still  weighty  objections  to  a  subsidy  policy. 
On  the  other  hand,  the  state  may  well  encourage 
trade  unions  to  undertake  to  provide  such  benefits, 
by  informing  them,  through  the  departments  of 

tin] 


SOCIAL  INSURANCE 

labor,  of  the  methods  employed  in  other  countries, 
and  by  safeguarding  their  funds. 

Useful  as  is  such  insurance,  it  is  difficult  to  see 
how  it  can  be  extended  beyond  the  well-organized 
trades  because  of  the  administrative  difficulties 
connected  with  it. 

I  have  reserved  for  final  consideration  the  method 
of  caring  for  the  unemployed  that  has  received 
most  attention  in  this  country,  that  is,  relief  work 
of  various  kinds,  either  public  or  private.  Un- 
doubtedly, in  times  of  depression  when  the  number 
of  the  unemployed  is  abnormally  large,  some  form 
of  relief  work  is  often  necessary.  On  the  other 
hand,  it  would  be  difficult  to  cite  a  case,  where 
relief  work  has  been  provided  on  any  considerable 
scale,  where  the  demoralizing  consequences  have 
not  largely  neutralized  the  expected  benefits. 
Whether  administered  by  public  officials  or  the 
agents  of  private  philanthropic  societies,  there  is 
about  relief  work  an  atmosphere  that  is  deaden- 
ing to  the  self-respect  of  those  who  accept  it.  The 
result  is  that  instead  of  preserving  the  standards 
and  the  efficiency  of  those  it  is  intended  to  help, 
relief  work  reduces  all  toward  the  level  of  the 
lowest  type  of  worker  who  is  employed.  Relief 
[  112  ] 


UNEMPLOYMENT 

works  of  various  kinds  and  on  an  unprecedented 
scale  have  been  maintained  in  England  during  the 
last  ten  years,  and  it  is  a  significant  fact  that  it  is 
the  opinion  of  the  Poor  Law  Commission  that  they 
have  served,  on  the  whole,  to  aggravate  rather  than 
to  relieve  the  problem  of  unemployment.  In  the 
ultimate  solution  of  the  problem  it  may  be  neces- 
sary to  assign  a  place  to  relief  work,  but,  in  my 
opinion,  when  the  resources  of  labor  exchanges  and 
unemployment  insurance  have  been  exhausted,  it 
will  be  better  to  send  the  unemployed  to  school 
and  train  them  to  do  the  work  for  which  there  is  a 
demand,  even  supporting  them  during  the  process, 
than  to  put  them  to  work  at  tasks  which  they  know 
and  every  one  knows  are  provided  for  the  express 
purpose  of  giving  them  something  to  do.  After 
all,  the  most  precious  asset  to  be  preserved  during 
a  period  of  stress  and  strain  is  the  independence, 
self-respect,  and  efficiency  of  those  subjected  to  it. 
Learning  to  be  a  better  workman  appeals  to  the* 
best  there  is  in  a  man,  whereas,  doing  artificially 
created  work  is  calculated  to  bring  out  his  worst 
characteristics.  So  far  as  the  labor  called  for  is 
concerned,  a  well-managed  industrial  or  trade  school 
can  be  made  to  apply  as  severe  a  work  test 
as  a  woodyard  or  a  sewing  room.  Finally,  when 
[113] 


SOCIAL  INSURANCE 

the  emergency  is  passed  and  the  unemployed  can 
again  find  employment,  their  training  ought  to 
help  them  to  command  higher  wages  and  to  be 
better  workmen  than  they  were  before.  Unem- 
ployment may  thus  prove  a  disguised  blessing 
instead  of  an  undisguised  affliction. 


CHAPTER  V 

PROVISION  FOR  OLD  AGE 

r  MHE  last  of  the  evils  that  I  propose  to  discuss  in 
JL  these  lectures  is  impecunious  old  age.  Hap-0 
pily,  old-age  poverty  is  less  conspicuous  in  the  United 
States  than  it  has  become  in  European  countries, 
but  it  is  already  sufficiently  common  to  present  a 
problem.1  Numerous  as  are  the  old  men's  homes, 
old  ladies'  homes,  and  homes  for  aged  couples  that 
are  supported  by  private  charity,  they  are  yet,  as 
every  worker  among  the  poor  knows,  too  few  to 
meet  the  demand.  Our  almshouses  are  also  practi- 
cally homes  for  the  aged  poor.  Some  almshouse\ 

1  We  have  no  trustworthy  information  in  regard  to  the 
amount  of  old-age  poverty,  as  distinguished  from  pauperism,  in 
the  United  States.  Statistics  of  pauperism  clearly  indicate, 
however,  our  more  favorable  situation.  Thus,  according  to  the 
Massachusetts  Commission  on  Old-age  Pensions,  Annuities, 
and  Insurance,  there  were  in  that  state  in  1908  8.5  paupers 
for  every  1000  of  the  population  as  compared  with  24.2  per 
thousand  in  the  United  Kingdom,  and  31.7  paupers  over  65 
years  of  age  for  every  1000  of  the  population  in  that  age  class 
as  compared  with  173  per  thousand  in  the  United  Kingdom. 

[115] 


SOCIAL  INSURANCE 

inmates  became   paupers   before  they  were  aged, 
but    many    of    them    led    independent    and    self- 
respecting  lives,  and  even  put  by  something  for 
the  future  while  physically  able  to  earn  wages. 
When  wages   ceased,  savings,  if   any  were  made, 
were  used  up  or  else  lost  in  unwise  investments, 
and  at  the  end  almshouse  relief  and  the  pauper's 
grave  were  preferred  to  exposure  and  starvation. 
Whatever  preconceptions  we  may  have  in  regard 
to  the  duty  of  thrift  and  the  importance  of  making 
every  one  suffer  the  consequences  of  his  own  lack 
of  forethought,  we  must  all  agree  that  the  lot  of 
the  aged  pauper  is  a  hard  one.     Other  countries 
are  trying  to  ameliorate  this  lot  by  substituting 
for  pauper  relief  compulsory  or  assisted  insurance 
or    old    age    pensions    of    various    kinds.      Their 
need  is  greater  than  ours,  but  this  makes  it  more 
!  important  that  we  study  the  problem  and  decide 
\  as  to  the  merits  and  demerits  of  different  plans 
|  for  providing  for  old  age,  before  an  aroused  pub- 
uic  opinion,  brought  to  bear  on  our  state  legisla- 
tures or  on  Congress,  forces  unwise  legislation. 

Old-age  poverty  is,  of  course,  not  a  new  problem. 

There   is   every   evidence,   however,   that  it  is   a 

problem  of  growing  seriousness.     In  the  country 

household   there  is  a  place  for  the  aged  parent  or 

[116] 


PROVISION  FOR  OLD  AGE 

grandparent.  The  family  has  a  settled  abode, 
and  economic  interest  reenforces  filial  regard  in 
securing  to 'old  people  proper  care  and  considera- 
tion. So  long  as  any  strength  remains,  there  is 
useful  work  about  the  house  or  farm  which  they 
may  do.  Moreover,  the  cost  of  maintaining  an 
aged  relative  in  the  country  is  so  small  as  to 
seem  an  insignificant  burden.  In  the  crowded 
tenement  houses  of  modern  cities  the  situation 
is  very  different.  Here,  as  industry  is  now  or- 
ganized, there  is  little  for  an  aged  person  to  do. 
The  positions  for  which  men  or  women  over  sixty- 
five  years  of  age  are  suited  are  few,  and  there  is 
always  ^an  excess  of  old  men  and  women  looking 
for  such  positions.  Furthermore,  the  cost  of 
maintaining  an  aged  relative  in  the  city  is  an 
appreciable  item  in  a  wage  earner's  budget,  and 
even  when  the  burden  is  cheerfully  borne,  it  means 
so  much  less  for  other  necessary  family  expendi- 
tures. 

As  changing  economic  conditions  are  rendering 
the  dependence  of  old  people  on  their  descendants 
for  support  increasingly  precarious,  so,  on  the  other 
hand,  new  obstacles  are  arising  to  providing  for  old 
age  through  voluntary  saving.  I  have  already 
spoken  of  the  tendency  of  expanding  wants  and 
[117] 


SOCIAL  INSURANCE 

of  city  conditions  of  property  ownership  to  dis- 
courage saving  on  the  part  of  wage  earners.  The 
call  of  the  savings  bank  and  of  the  insurance 
company  is  weak  in  comparison  with  the  old-time 
call  of  free. land  and  a  home  of  one's  own.  As 
the  typical  American  is  changing  from  the  farmer 
to  the  factory  employee,  the  likelihood  that  old- 
age  poverty  will  be  provided  against  by  voluntary 
saving  is  decreasing.  We  have  not  yet  seen  the 
normal  consequences  of  this  development  in  the 
United  States,  because  we  are  still  in  a  transi- 
tion stage.  European  experience,  however,  should 
leave  us  in  no  doubt  that  a  great  increase  in  old- 
age  poverty  lies  before  us,  unless  we  are  prompt 
in  taking  measures  against  it. 

The  proper  method  of  safeguarding  old  age  is 
'  clearly  through  some  plan  of  insurance.  vOld  age 
is  a  risk  to  which  all  are  liable,  but  which  many 
never  live  to  experience.  Thus,  according  to 
American  life  tables,  nearly  two  thirds  of  those 
who  survive  the  age  of  ten  die  before  the  age  of 
seventy.  Under  these  circumstances,  for  every 
wage  earner  to  attempt  to  save  enough  by  himself 
to  provide  for  his  old  age  is  needlessly  costly. 
The  intelligent  course  is  for  him  to  combine  with 
other  wage  earners  to  accumulate  a  common  fund 
[118] 


PROVISION  FOR  OLD  AGE 

out  of  which  old-age  annuities  may  be  paid  to  those 
who  live  long  enough  to  need  them.    ! 

There  is  little  evidence  that  wage  earners  have 
thus  far  made  much  use  of  such  machinery  as  is 
available  for  procuring  old-age  annuities.  This 
is  partly  because  of  a  lack  of  prudence  and  fore- 
thought on  their  part,  but  partly,  also,  because 
until  quite  recently  the  machinery  itself  has  been 
unsatisfactory.  Trade-union  and  fraternal  in- 
surance have  done  something  to  meet  this  need, 
but  neither  is  on  a  very  secure  basis  from  the 
actuarial  standpoint,  and  the  number  of  indi- 
viduals benefited  has  been  small. 

Much  more  significant  in  its  promise  for 
future  is  the  introduction  of  old-age  pension  plans    i 
by  some  of  the  railroad  and  industrial  corporations. 
The  pioneer  in  this  field  was  the  Baltimore 
Ohio  Railroad,  which  inaugurated  its  pension  policy 
in  1884.     Its  example  has  already  been  followed 
by    twenty-four    other    railroads,    including    such 
important   systems    as   the    Chicago    and   North- 
western, the  Delaware,  Lackawanna,  and  Western, 
the  Illinois  Central,  the  Pennsylvania,  the  Phila- 
delphia   and  Reading,   the    Southern    and    Union 
Pacific,  and  the  New  York  Central.     Needless  to 
say,  these  pension  systems,  though   they  require, 
[119] 


SOCIAL  INSURANCE 

often,  no  contribution  whatever  from  the  em- 
ployees who  benefit  from  them,  have  not  been 
introduced  on  grounds  of  philanthropy.  They 
are  frankly  intended  for  the  good  of  the  service. 
As  Mr.  Burton  Hendrick  puts  the  matter  in  an 
article  on  "The  Superannuated  Man":1  "The 
most  effective  way  of  securing  the  right  kind  of 
force  is  obviously  to  adopt  a  broad  general  policy 
that  will  attract  the  most  ambitious  men,  and 
secure  from  them  the  most  efficient  work  of  their 
productive  years.  The  laws  of  gravitation  affect 
wage  earners  as  well  as  other  objects  in  nature; 
the  best  inevitably  gravitate  toward  the  most 
satisfactory  terms  of  employment.  The  corpora- 
tion that  can  insure  its  employees  a  reasonable 
permanency  of  employment,  promotion  in  order 
of  precedence  and  fitness,  and  a  satisfactory  pro- 
vision for  old  age,  will  inevitably  attract  the  highest 
grade  of  men  and  obtain  from  them  the  most  effi- 
cient work." 

From  the  point  of  view  of  the  railroad  companies 
which  have  been  so  enlightened  as  to  introduce 
them,   these  pension   systems   are   admirable.     A 
study  of    their  detailed  provisions  leaves  one    a 
little  less  certain  that  they  are  entirely  satisfactory 
1  McClure's  Magazine,  December,  1908. 
[120] 


PROVISION  FOR  OLD  AGE 

from  the  point  of  view  of  the  men.  Their  primary 
object  is  to  insure  continuity  of  service.  Thus, 
all  of  them  limit  their  benefits  to  employees  who 
have  been  in  the  service  of  the  corporation  for 
a  considerable  period  of  years,  ten,  fifteen,  twenty, 
twenty-five,  and  in  one  case  thirty  years  being 
prescribed.  Again,  all  of  them  base  the  amount 
of  pension  on  the  period  of  service,  a  usual  plan 
being  to  pay  one  per  cent  of  the  average  wages  during 
the  last  ten  years  for  each  year  of  service.  Their 
whole  tendency  is  thus  to  tie  the  employee  to  the 
single  corporation  for  life.  As  regards  railroad 
corporations,  continuity  of  service  is  so  important 
to  the  safety  of  the  traveling  public,  and  the 
relations  between  employer  and  employee  are  on 
the  whole  so  satisfactory,  that  this  is  perhaps  not 
a  serious  objection. 

The  same  system,  however,  is  being  widely 
adopted  by  industrial  Corporations.  Already 
twenty  or  mofe  such  corporations,  including  the 
American  Stee^  and  Wire  Company,  the  Inter- 
national Harvester  Company,  the  Standard  Oil 
Company,  the  Metropolitan  Street  Railway  Com- 
pany, and  the  Western  Electric  Company,  have 
such  plans  in  operation,  and  many  more  are 
contemplating  their  introduction.  In  the  opinion 


SOCIAL  INSURANCE 

of  employees  in  competitive  industries,  any  plan 
which  ties  a  man  to  his  job  by  discouraging  him 
from  changing  from  one  employer  to  another,  when 
by  so  doing  he  may  better  his  condition,  is  undesir- 
able. All  economists  recognize  that  the^  mobility 
n^fjabor  is  an  important  factor  in  securing  for  wage 
earners  higher  earnings  and  better  conditions.  These 
pension  plans  are  intended  to  and  do  oppose 
the  free  mobility  of  labor.  No  fault  is  to  be 
found  with  the  employer  for  desiring  to  insure  the 
stability  of  his  labor  force.  On  the  other  hand, 
we  must  recognize  that  these  plans  which  make 
enjoyment  of  an  old-age  annuity ,  contingent  on 
devotion  to  a  single  employer  over  a  long  period 
of  years  may  seriously  hamper  wage  earners  in 
their  efforts  to  improve  their  lot. 

I  mention  this  drawback  not  because  it  seems 
to  me  an  insurmountable  obstacle  in  the  way  of 
solving,  or  largely  solving,  the  problem  of  provision 
for  old  age  through  corporate  initiative,  but  be- 
cause I  think  it  ought  to  receive  more  sympathetic 
consideration  than  corporate  managers  have  yet 
accorded  to  it.  These  corporation  systems  in  their 
present  form  may  be  compared  with  the  old-age 
pension  systems  that  were  maintained  by  some 
of  our  universities  before  Mr.  Carnegie  came  for- 
[122] 


PROVISION  FOR  OLD  AGE 

ward  to  provide  old-age  pensions  for  college  pro- 
fessors through  the  Carnegie  Foundation.  Under 
the  old  plan,  a  professor  at  Columbia,  for  example, 
was  entitled  to  a  pension  after  a  certain  number 
of  years'  service,  if  he  remained  at  Columbia  until 
he  attained  the  age  of  sixty-five.  This  was  a  good 
system  for  Columbia,  but  it  cannot  be  denied  that 
it  had  a  tendency  to  keep  men  in  New  York  when 
it  might  have  been  better  for  them  and  better  for 
the  country  if  they  had  felt  freer  to  go  to  other 
universities  to  which  they  were  called.  By  Mr. 
Carnegie's  benefaction  a  national  system  of  pen- 
sions for  college  professors  was  substituted  for 
the  local  systems  that  were  previously  established. 
The  Columbia  professor  to-day  is  no  better  off, 
if  he  prefers  to  remain  at  Columbia,  than  he  was 
before  the  Carnegie  Foundation  was  established. 
He  is  freer,  however,  to  consider  on  its  merits 
any  invitation  to  take  his  Columbia  training  and 
his  Columbia  experience  to  another  institution 
which  may  require  his  services.  By  his  bene- 
faction, Mr.  Carnegie  increased  the  mobility  of 
the  teaching  staff  of  our  American  colleges,  and 
I  believe  the  country  is  the  better  for  the  change. 
It  would  be  entirely  possible  for  the  great  cor- 
porations that  have  taken  the  initiative  in  supply- 
[123] 


SOCIAL  INSURANCE 

ing  old-age  annuities  for  their  employees  to  sub- 
stitute for  their  establishment  plans  some  system 
by  which  the  employee  who  could  better  himself 
by  changing  to  another  employer  might  do  so 
without  forfeiting  his  right  to  the  annuity.  To 
explain  how  this  might  be  done,  I  must  first  de- 
scribe two  other  important  recent  developments,  in 
the  field  of  old-age  insurance  in  the  United  States, 
the  Massachusetts  Savings  Bank  Insurance  plan, 
and  the  offer  of  new  types  of  old-age  annuity 
policies  by  the  commercial  insurance  companies. 
\  The  Massachusetts  Savings  Bank  Insurance 
system  was  introduced  three  years  ago,  for  the 
purpose  of  bringing  ^hgaj^fejand  old-age  insurance 
within  the  reach  of  all  wage  earners  who  patronize 
ejtayjj^^  or  collectors 

are  employed  by  the  banks,  and  consequently  the 
cost  of  administering  the  system  is  kept  at  a  mini- 
mum. It  is  expected  that  business  will  come  to 
the  banks  not  only  from  wage  earners  who  wish 
policies  for  themselves,  but  from  trade  unions, 
mutual  benefit  associations,  and  employers  who 
wish  policies  for  their  members  or  employees. 
The  banks  insure  not  only  individuals  but  groups 
of  individuals,  and  their  initial  rates,  which  are 
themselves  low,  are  made  even  more  attractive 
[124] 


PROVISION  FOR  OLD  AGE 

by  the  payment  of  substantial  dividends.  Thus, 
the  dividend  last  year,  the  first  year  during  which 
the  system  was  in  full  operation,  was  8J  per  cent 
to  all  policy  holders.  The  system  has  not  yet  been 
in  operation  long  enough  to  justify  confident  as- 
sertions in  regard  to  its  success.  Its  promoters 
claim  that  it  has  already  forced  the  commercial 
companies  materially  to  reduce  their  rates,  and 
that  still  further  reductions  are  probable.  On 
the  other  hand,  the  commercial  companies  assert 
that  they  were  about  to  reduce  their  rates  any  way, 
and  that,  if  they  were  given  the  same  privileges 
as  the  savings  banks  in  regard  to  the  issue  of  group 
policies,  they  could  offer  better  service  at  lower  terms 
than  their  new  competitors. 

That  an  important  change  in  the  policy  of  the 
industrial  insurance  companies  was  made,  at  about 
the  same  time  that  Massachusetts  introduced 
her  interesting  experiment,  is  generally  admitted. 
The  premium  rates  on  workmen's  insurance  poli- 
cies have  been  materially  reduced,  and  numerous 
new  forms  of  policies  designed  to  meet  more  ex- 
actly the  real  requirements  of  wage  earners  have 
been  put  out.  Thus,  the  Metropolitan  Insurance 
Company  has  recently  offered  a  combined  life 
and  old-age  annuity  policy  at  rates  that  bring  it 
[125] 


SOCIAL  INSURANCE 

within  the  reach  of  all  wage  earners,  except  the 
very  poorest,  who  have  the  forethought  to  provide 
against  these  contingencies.  The  Metropolitan 
Company  has  also  sought  to  have  the  insurance 
laws  of  the  various  states  amended  to  enable  it  to 
offer  group  policies.  Such  amendments  have  been 
made  in  Maine,  New  Jersey,  and  Minnesota,  and 
though  bills  having  this  end  in  view  were  defeated 
in  Massachusetts,  and,  through  the  governor's 
veto,  in  New  York,  it  seems  probable  that  such  a 
desirable  change  will  soon  be  made  in  the  insurance 
laws  of  all  of  the  states. 

The  plan  by  which  well-disposed  employers 
might  free 'their  offer  of  old-age  annuities  to  their 
employees  of  the  objection  that  such  old-age  an- 
nuities tie  them  to  their  jobs,  is,  briefly,  as  follows: 
Taking  advantage  of  the  low  rates  for  insuring 
groups  of  men,  employers  might  secure  old-age 
annuity  policies  for  their  employees  as  they  are 
added  to  their  force.  The  premiums  on  these 
policies  might  be  paid  wholly  by  the  employer,  as 
an  addition  to  wages  designed  to  attract  a  higher 
type  of  workmen;  wholly  by  the  employee,  as  a 
deduction  from  his  wages  voluntarily  agreed  to  at 
the  time  he  enters  the  employment;  or,  partly  by 
the  employer  and  partly  by  the  employee.  In  any 
[126] 


PROVISION  FOR  OLD  AGE 

event,  the  employee  should  be  given  a  property 
right  in  the  policy  taken  out  for  his  benefit.  If  he 
decided  at  any  time  to  change  to  another  employer, 
the  policy  should  be  freely  surrendered  to  him,  or 
its  cash  value  paid  over  to  him.  On  entering  the 
employment  of  a  new  employer  who  had  a  similar 
system,  he  should  be  required  to  deposit  his  policy 
with  the  employer,  and  the  premiums  on  it  would 
be  paid  by  the  new  employer,  in  accordance  with 
whatever  plan  he  was  pursuing  with  reference  to 
his  other  employees. 

Along  these  lines  it  would  be  possible,  if  broad- 
minded  employers  would  take  the  initiative  and 
look  at  the  problem  from  the  point  of  view  of  the 
deep  social  interests  at  stake,  for  the  United  States 
to  go  far  toward  securing  the  benefits  of  the  com- 
pulsory old-age  insurance  system  of  Germany,  or 
the  old-age  pension  system  of  the  United  Kingdom, 
while  avoiding  the  serious  disadvantages  of  both 
plans.  It  is  perhaps  visionary  to  expect  that 
American  employers  will  do  this,  but  there  is  good 
ground  for  maintaining  that,  unless  they  will  carry 
out  some  such  plan,  old-age  pensions  paid  by  cor- 
porations to  the  employees  who  have  been  long  and 
faithful  in  their  service  will  fail  to  solve  the  serious 
social  problem  presented  by  old-age  poverty. 
[127] 


SOCIAL  INSURANCE 
y 

Another  important   development  in  the  line  of 

provision  for  old  age  is  the  growing  agitation  for 
old-age  annuities  for  civil  service  employees.  Aside 
from  humanitarian  considerations,  there  can  be  no 
question  that  the  efficiency  of  the  public  service 
requires  some  arrangement  for  the  enforced  retire- 
ment of  civil  service  employees  at  a  stated  age. 
The  United  States  is  the  only  important  country 
which  has  not  introduced  retiring  allowances  for 
public  employees.  The  authorities  at  Washington 
are  so  impressed  with  the  importance  of  the  ques- 
tion that  President  Taft,  the  Secretary  of  the 
Treasury,  and  the  Secretary  of  the  Interior  have 
united  in  urging  Congress  to  pass  a  civil  service 
old-age  pension  law  during  the  present  session. 
The  same  considerations  that  apply  to  old-age 
pensions  for  federal  employees  apply  to  state, 
county,  and  municipal  employees.  It  is  a  signifi- 
cant indication  of  the  trend  of  the  times  that  the 
Report  of  the  Commission  on  Old-age  Pensions, 
Annuities,  and  Insurance,  which  has  just  been 
submitted  to  the  Massachusetts  legislature,  while 
highly  conservative  in  most  of  its  recommenda- 
tions, comes  out  strongly  in  favor  of  retiring  allow- 
ances for  public  employees.  In  this  connection  it 
says:  "The  fundamental  consideration  is  one  of 
[128] 


PROVISION  FOR  OLD  AGE 

economy  and  efficiency.  The  retirement  system 
will  stop  the  waste  and  demoralization  now  involved 
by  the  continuance  of  worn-out  workers  in  the 
public  service."  To  supplement  this  recommenda- 
tion, it  has  introduced  bills  into  the  legislature  pro- 
viding retiring  allowances  for  state,  county,  city,  and 
town  employees  based  on  the  contributory  principle. 
So  much  for  the  situation  as  regards  provision 
for  old  age  in  the  United  States.  Other  countries, 
as  already  stated,  have  gone  much  further  in  de- 
veloping policies  to  cope  with  this  problem  than  we 
have.1  In  this,  as  in  so  many  fields,  Germany  was* 
y  the  pioneer.  Following  the  successful  establish- 
f  ment  of  compulsory  illness  and  compulsory  acci- 
dent insurance  through  the  acts  passed  in  1883  and 
1884,  the  imperial  government  introduced  com- 
pulsory old-age  and  invalidity  insurance  in  1889. 
Under  this  system,  employers  in  Germany  are 
required  to  insure  their  employees  sixteen  years  of 
age  and  over,  by  paying  the  prescribed  premiums 
to  the  local  insurance  offices.2  One  half  of  these 

Admirable  brief  descriptions  of  foreign  systems  of  caring 
for  old  age  are  given  in  the  Preliminary  Report  of  the  [Massa- 
chusetts] Commission  on  Old-age  Pensions,  etc.,  submitted  to 
the  legislature  in  January,  1909. 

2  The  method  of  payment  is  through  the  purchase  of  in- 
surance stamps  which  the  employer  is  required  to  affix  each 

*  [  129  ] 


SOCIAL  INSURANCE 

premiums  is  deducted  from  the  wages  of  the  em- 
ployee; the  other  half  is  contributed  by  the  em- 
ployer. The  government  itself  contributes  50 
marks  ($12.50)  per  annum  to  each  annuitant,  and 
also  bears  most  of  the  expense  of  administering  the 
system.  The  annuities  are  paid  to  any  insured 
person  who  is  completely  disabled  from  earning 
wages,  or  who  has  attained  his  seventieth  year, 
whether  incapacitated  from  earning  wages  or  not. 
The  amount  of  annuity  depends  on  the  wage  class 
to  which  the  insured  belongs,  but  is,  in  any  event, 
quite  small  according  to  American  standards,  the 
highest  pension  being  only  230  marks  ($57.50)  a  year.1 
There  can  be  no  question  but  that  Germany's 
system  has  succeeded  in  ameliorating  old-age  pov- 
erty in  that  country.  The  opposition  to  it,  which 
was  at  first  bitter  on  the  part  of  employers,  has 
disappeared,  and  it  is  now  looked  upon  as  reasonable 
and  desirable  social  legislation.  Nevertheless,  this 
feature  of  Germany's  compulsory  insurance  system 
has  not  been  imitated  by  other  countries.  Among 
the  objections  urged  against  it  are:  — 

week  to  the  insurance  cards  carried  by  his  workmen.      The 
pensions  themselves  are  paid  through  the  post  offices. 

1  Though  the  average  pension  paid  in  1906  was  only  $39.52, 
the  system  called  for  a  total  expenditure  in  that  year  of 
$32,845,000. 

[130] 


PROVISION  FOR  OLD  AGE 

(1)  It  imposes  an  onerous  tax   on    employers 
which  it  is  not  easy  to  justify.     Old  age  is  not  the 
result  of  employment,  but  entirely  distinct  and  in- 
dependent of  it.     If  a  comprehensive  plan  for  pro- 
viding maintenance  for  the  aged  is  to  be  adopted, 
why  should  employers  be  singled  out   to  make  a 
special  contribution  to  it?     On  what  ground  can  it 
be  maintained  that  they  are  any  more  responsible 
for  the  solution  of  this  social  problem  than  any  other 
class  in  the  community?     In  Germany,  employers 
submit  to  it  because,  between  the  landed  aristoc- 
racy on  the  one  hand  and  the  social  democrats  on 
the  other,  they  are  politically  weak.     It  would  be 
difficult  to  make  them. submit  to  it  in  a  country 
where  their  political  influence  was  greater. 

(2)  The  administration  of  the  system  requiring, 
as  it  does,  so  many  small  contributions   collected 
over  such  a  long  period  of  years  is  both  cumbrous 
and  costly.1     Unless  it  can  be  clearly  shown  that 
this  method  of  providing  old-age  annuities  fosters 
thrift  on  the  part  of  those  who  benefit  from  it,  as 
the  method  of  old-age  pensions  paid  directly  from 

1  The  weekly  premiums  now  required  range  from  14  pfennigs 
(3  J  cents)  for  the  lowest  grade  of  wage  earners  to  36  pfennigs 
(9  cents)  for  the  highest.  As  the  insurance  begins  at  16  and 
continues  to  70,  it  would  be  necessary,  in  the  normal  case,  to 
affix  the  stamps  2808  times. 

[131] 


SOCIAL  INSURANCE 

the  public  treasury  fails  to  do,  the  greater  costliness 
of  administering  it  is  a  serious  objection. 

(3)  It  is  questioned  whether  compulsory  insur- 
ance does  tend  to  foster  thrift.  Compulsory  thrift 
is  almost  a  contradiction  in  terms.  It  is  not 
through  being  compelled  to  save  that  people  de- 
velop the  habit  of  looking  forward  and  the  spirit 
of  enterprise  which  will  lead  them  voluntarily  to 
make  provision  for  future  needs.  This  is  a  psy- 
chological question,  and  those  who  have  studied 
the  reaction  of  Germany's  system  on  the  habits 
of  Germany's  wage  earners  hold  diverse  views  in 
regard  to  it.  There  certainly  appears  to  be  some 
evidence  that  now  that  the  discussion  of  the  system 
has  largely  ceased,  wage  earners  think  of  their 
wages  as  what  is  left  after  employers  have  made  the 
deductions  which  the  law  requires,  and  look  upon 
those  deductions  as  taxes  to  which  they  are  subject, 
without  giving  much  thought  to  the  fact  that  the 
proceeds  may  ultimately  be  expended  for  their 
benefit. 

The  same  general  social  conditions  which  led 
Germany  to  introduce  compulsory  old-age  insur- 
ance, led  Denmark,  two  years  later  (1891),  to  intro- 
duce her  system  of  old-age  pensions.  This  was 
part  of  a  comprehensive  reform  of  the  Poor  Law, 
[132] 


PROVISION  FOR  OLD  AGE 

which  was  designed  to  deal  even  more  rigorously  with 
what  we  may  call  the  "undeserving"  poor,  and  at 
the  same  time  to  treat  more  generously  and  con- 
siderately the  victims  of  misfortune.  To  be  en- 
titled to  a  pension  under  the  Danish  law,  the  appli- 
cant must  satisfy  the  following  conditions :  - 

(1)  He  must  not  have  been  convicted  of  a  crime 
or  of  a  dishonorable  transaction. 

(2)  His   income   from   other    sources    must    be 
insufficient  to  provide  the  necessaries  of  life,  or 
proper  treatment  in  case  of  sickness  for  himself 
or  those  dependent  upon  him. 

(3)  His  poverty  must  not  be  a  consequence  of 
any  action  by  which  he  has  deprived  himself  of 
the  means  of  subsistence  for  the  benefit  of  his  chil- 
dren or  others. 

(4)  During  the  ten  years  preceding  his  applica- 
tion he  must  have  had  a  fixed  residence  in  the 
country,  and  not  have  applied  for  pauper  relief  or 
have  been  found  guilty  of  vagrancy  or  begging. 

(5)  Finally,  according  to  a  proviso  added  in  1902, 
he  must  not  have  led  a  life  such  as  to  cause  scandal  nor 
have  been  convicted  of  drunkenness  or  immorality. 

Any  person  who  has  completed  his  sixtieth  year, 
and  satisfies  these  requirements,  may  apply  for  an 
old-age  pension  to  be  paid  entirely  out  of  the  public 
[133] 


SOCIAL  INSURANCE 

treasury.  The  amount  of  the  pension  depends 
upon  the  cost  of  living  in  the  locality,  and  is  deter- 
mined by  local  officials.  That  it  is  not  excessive 
may  be  inferred  from  the  fact  that  in  1904  the 
maximum  pension  paid  was  only  $84  a  year  (in 
Copenhagen),  and  the  average  was  less  than  $40. 
For  pensioners  who  have  no  relatives  or  friends  with 
whom  they  may  lodge,  old-age  homes  are  provided 
of  which  Miss  Sellers  draws  quite  an  idyllic,  picture 
in  her  interesting  account  of  the  Danish  Poor  Relief 
System.  They  are  managed  more  as  small  inns 
or  boarding  houses  than  as  charitable  institutions, 
and  the  residents  are  treated  as  voluntary  guests 
rather  than  as  inmates. 

Students  of  the  Danish  system  say  that  that 
country,  by  making  a  sharp  distinction  between 
paupers  and  pensioners,  has  succeeded  in  provid- 
ing for  the  victims  of  misfortune  in  their  old  age 
without  discouraging  thrift  and  prudence  on  the 
part  of  the  wage-earning  classes.  The  very  fact 
that  to  secure  an  old-age  pension  the  applicant 
must  not  have  been  in  receipt  of  public  relief  or 
been  convicted  of  begging  or  vagrancy  during  the 
preceding  ten  years  necessitates  a  self-supporting 
existence  up  to  the  time  when  wage-earning  capac- 
ity begins  to  wane. 

[134] 


PROVISION  FOR  OLD  AGE 

Germany's  and  Denmark's  systems  were  intro- 
duced by  conservative  leaders  who  were  alarmed 
by  the  progress  of  radical  thought  as  typified  in  the 
social  democratic  party.  From  this  point  of  view, 
the  adoption  of  old-age  pensions  by  New  Zealand 
and  the  states  of  Australia,  which  came  next  in 
chronological  order,  is  highly  suggestive.  New 
Zealand's  system,  which  was  introduced  in  1898, 
was  the  policy  of  the  labor  party  itself.  This  sys- 
tem was  copied  within  the  next  few  years  by  New 
South  Wales  and  Victoria,  and  in  1908  introduced 
for  the  whole  Commonwealth  of  Australia  through 
a  federal  law  which  has  just  come  into  operation. 

The  spirit  of  this  legislation  is  indicated  by  the 
preambles  to  the  statutes  introducing  it.  The  laws 
of  New  Zealand  and  New  South  Wales  declare  that 
"it  is  equitable  that  deserving  persons  who,  during 
the  term  of  life,  have  helped  to  bear  the  public 
burden  of  the  Commonwealth  by  the  payment  of 
taxes,  and  by  opening  up  its  resources  by  their 
labor  and  skill,  should  receive  from  the  colony 
pensions  in  their  old  age."  The  law  of  Victoria 
goes  even  further,  asserting  that  "it  is  the  duty 
of  the  state  to  make  provision  for  its  aged  and 
helpless  poor."  As  the  main  features  of  these 
systems  are  reproduced  in  the  recently  adopted 
[135] 


SOCIAL  INSURANCE 

system  of  Australia,  a  brief  description  of  the  latter 
will  suffice.  In  order  to  secure  a  pension  in  Aus- 
tralia, the  applicant  must  have  attained  the  age 
of  sixty-five,  must  have  resided  in  the  country  for 
twenty-five  years  continuously  prior  to  the  date 
of  application,  must  be  of  good  character  (that  is, 
have  led  a  temperate  and  reputable  life  during  the 
five  years  immediately  preceding  the  date  of  appli- 
cation), must  not  have  deserted  husband,  wife,  or 
children,  and  must  be  in  need  of  the  assistance, 
the  test  being  the  amount  of  income  from  other 
sources  (not  more  than  £52)  or  the  amount  of 
property  owned  (not  more  than  £310).  The  per- 
sons satisfying  these  requirements  are  entitled  to 
pensions  of  not  more  than  £26  ($130)  a  year.  If 
the  income  from  other  sources  amounts  to  more 
than  £26,  the  pension  is  reduced  correspondingly, 
the  total  income  being  kept  down  to  £52  a  year 
($260). 

*  It  is  too  early  to  judge  of  the  effect  of  this 
federal  old-age  pension  policy  in  Australia.  The 
New  Zealand  system,  however,  has  now  been  in 
operation  for  more  than  ten  years,  and  some 
notion  of  its  tendencies  may  be  formed.  The  total 
number  of  pensioners  in  1908,  out  of  a  population 
of  about  one  million,  was  13,569.  The  expenditure 
[136] 


PROVISION  FOR  OLD  AGE 

for  pensions  in  that  year  was  $1,626,000,  or  ap- 
proximately $1.70  per  capita  of  the  population.1 
Since  the  system  was  introduced,  the  number  of 
pensionaires  has  increased  year  by  year,  but  not 
with  alarming  rapidity.  The  amount  paid  in  pen- 
sions has  trebled  during  the  ten  years  from  1899 
to  1908,  but  this  fact  was  due  in  large  measure  to 
changes  in  the  law  which  increased  the  maximum 
pension  from  £18  to  £26.  As  an  offset  to  this 
expenditure,  the  pension  policy  has  reduced  the 
amount  expended  on  outdoor  relief;  there  has 
been,  on  the  other  hand,  an  increase  in  the  amount 
spent  in  indoor  relief,  but  that  is  explained  chiefly 
by  more  liberal  provision  for  indoor  paupers. 

The  pension  system  that  has  attracted  most 
attention,  and  that  for  obvious  reasons  is  most 
interesting  to  us  in  the  United  States,  is  that  intro- 
duced into  the  United  Kingdom  by  the  act  passed 

1  If  a  similar  policy  were  adopted  by  the  United  States,  and 
the  per  capita  expense  entailed  was  the  same  as  in  New  Zealand, 
—  the  cost  of  living  there  being  as  high  as  the  cost  here,  — 
the  resulting  addition  to  national  expenditures  would  be  some- 
what less  than  the  present  cost  of  our  military  pensions 
($161,710,367  for  year  ending  June  30,  1909).  This  is  a  very 
large  item,  but  as  our  military  pensions  are  assuming  more  and 
more  every  year  the  character  of  old-age  pensions,  and  should 
from  now  on  decrease,  it  cannot  be  said  to  be  larger  than  the 
country  could  bear,  if  the  policy  were  deemed  wise. 

[137] 


SOCIAL  INSURANCE 

August  1,  1908,  and  which  came  into  operation 
January  1  of  last  year.  This  act  follows  the 
laws  of  Denmark,  New  Zealand,  and  Australia  in 
limiting  rigidly  the  persons  who  are  entitled  to  this 
form  of  public  assistance.  To  receive  a  pension 
in  the  United  Kingdom,  a  person  must  have  at- 
tained the  age  of  seventy,  must  have  been  a  resi- 
dent in  the  country  during  the  twenty  years  pre- 
ceding the  application  for  the  pension,  must  satisfy 
the  pension  authorities  that  his  yearly  income  from 
other  sources  does  not  exceed  £31  10s.  ($157.50), 
that  he  has  not  failed  to  work  according  to  his 
ability,  opportunity,  and  need,  for  the  maintenance 
of  himself  and  family,  and  that  he  has  not  within 
ten  years  been  convicted  of  any  offense  for  which 
the  punishment  is  imprisonment  without  the  option 
of  a  fine.  The  amount  of  the  pension  for  persons 
whose  income  from  other  sources  does  not  exceed 
£21  ($105),  is  5s.  or  $1.25  a  week.  From  this 
maximum  the  pension  declines  with  the  amount  of 
the  income  from  other  sources.  Persons  whose 
outside  income  exceeds  £31  10$.  a  year  may  not 
claim  a  pension.  Under  this  law,  some  667,000 
persons  qualified  for  pensions  during  the  first  year, 
and  the  resulting  expenditure  amounted  in  round 
figures  to  $40,000,000.  These  667,000  persons  con- 
[138] 


PROVISION  FOR  OLD  AGE 

stitute  somewhat  more  than  one  half  of  the  popu- 
lation of  the  United  Kingdom  seventy  years  of  age 
and  over. 

As  is  well  known,  the  United  Kingdom  did  not 
adopt  an  old-age  pension  policy  without  having 
devoted  many  years  to  the  consideration  of  the 
subject.  As  long  ago  as  1878,  Canon  Blackley 
proposed  a  contributory  old-age  penston  policy. 
From  that  year  until  the  enactment  of  the  old-age 
pension  law  thirty  years  later,  a  great  variety  of 
pension  plans  were  proposed  and  considered  by 
royal  commissions,  parliamentary  committees,  and 
successive  cabinets.  On  the  eve  of  the  Boer  War 
the  Conservative  Ministry  of  the  day  was  on  the 
point  of  introducing  an  old-age  pension  bill  into 
Parliament.  The  state  of  the  public  treasury 
during  and  immediately  after  that  war  made  the 
adoption  of  arfy  pension  policy  impossible.  How 
favorably  English  public  opinion  is  disposed  to  this 
method  of  caring  for  the  aged  poor  is  attested 
by  the  fact  that  when  the  Liberal  government 
came  into  power  three  years  ago  this  was  one  of 
the  policies  which  it  put  into  effect.  Its  attitude 
was  no  doubt  influenced  by  the  growing  strength 
of  the  Labor  party,  but  there  is  every  indication 
that  even  had  the  Labor  party  failed  to  return 
[139] 


SOCIAL  INSURANCE 

fifty-two  members  to  the  last  Parliament,  some 
sort  of  old-age  pension  system  would  have  been 
adopted. 

Though  it  is  too  early  to  form  a  confident  opin- 
ion as  to  the  effect  of  tRe  new  policy  on  the  habits 
of  wage  earners,  there  is  certainly  little  ground  for 
some  of  the  arguments  often  heard  in  this  country 
against  this  and  similar  old-age  pension  systems. 

Few  people  appear  to  have  given  adequate 
thought  to  the  circumstances  which  narrowly 
limit  the  problem  of  providing  pensions  for  the 
aged  poor.  The  payment  of  such  pensions  clearly 
has  no  tendency  to  increase  the  number  of  persons 
who  pass  the  age  of  seventy.  Old-age  poverty  is 
too  remote  from  the  calculations  of  youths  and 
maidens  to  have  any  effect  on  marriage  or  birth 
rates.  At  most,  assuring  to  old  people  bare  main- 
tenance, after  they  pass  a  certain  age  can  affect 
their  number  only  by  extending  somewhat  the 
length  of  life.  No  one  can  be  so  inhumane  as  to 
i^rge  this  as  an  objection  to  the  policy. 
1  But  provision  of  old-age  pensions  may  tend  to 
increase  the  number  of  aged  poor,  that  is,  may 
discourage  thrift  on  the  part  of  the  wage-earning 
jnasses.  This  thought  leads  many  intelligent  peo- 
ple, who  appreciate  the  desirability  of  collective 
[140] 


PROVISION  FOR  OLD  AGE 

provision  for  old  age,  to  favor  the  system  of 
compulsory  insurance,  while  opposing  strenuously 
gratuitous  old-age  pensions.  In  my  opinion,  the 
idea  that  compulsory  insurance  against  such 
remote  contingency  as  old  age  fosters  thrift 
illusory.  As  already  suggested,  providence  anc 
forethought  are  not  developed  through  compulsion; 
are,  in  fact,  almost  inconsistent  with  compulsion. 
On  the  other  hand,  old  age  is  only  one  and  not  a 
very  important  one,  of  the  contingencies  that  put  a 
high  premium,  as  society  is  now  organized,  on  a  sav- 
ing disposition.  It  is  desirable  to  save  and  acquire 
property  to  get  on  in  the  world,  to  give  children 
a  better  start  than  their  parents  enjoyed,  to  be 
assured  more  than  bare  necessaries  as  old  age  comes 
on,  etc.  These,  the  strongest  motives  leading  t( 
saving,  are  unaffected  by  the  guarantee  of  a  smal 
annuity  out  of  the  public  treasury  after  a  certain 
age  has  been  reached,  especially  if  one  condition 
to  securing  the  annuity  is  that  the  applicant 
should  not  have  received  poor  relief  up  to  the  time 
when  the  application  is  made.  The  smallness 
of  the  pension  in  all  the  countries  having  old-age 
pension  laws  (the  maximum  being  only  $2.50  a 
week  in  Australia  and  New  Zealand)  and  insistence 
that  during  the  years  immediately  preceding  ap- 
[141] 


SOCIAL  INSURANCE 

plication  for  a  pension  the  candidate  should  have 
lived  a  respectable  and  self-supporting  existence, 
makes  any  discouragement  of  thrift  in  consequence 
of  the  policy  quite  improbable. 

It  is  no  doubt  a  deplorable  fact  that  in  the  United 
Kingdom  more  than  half  of  the  persons  who  have 
passed  the  age  of  seventy  should  be  entitled  to 
pensions  under  the  by  no  means  excessively  liberal 
provisions  of  the  law,  but  this  fact  was  not  the 
result  of  the  pension  policy;  the  large  amount  of 
old-age  poverty  which  it  reflects  was  rather  the 
cause  of  the  pension  policy.  It  was  because 
statistics  showed  that  one  fifth  of  the  population 
from  seventy  to  seventy-five,  one  fourth  of  that 
from  seventy-five  to  eighty,  and  quite  one  third 
of  that  over  eighty,  was  actually  dependent  on 
pauper  relief  that  a  more  humane  way  of  caring 
for  the  aged  poor  was  introduced.  In  my  opinion, 
there  is  quite  as  much  reason  for  anticipating  that 
the  new  policy  will  encourage  thrift  as  for  the 
contrary  view.  The  guarantee  of  five  shillings 
a  week  may  encourage  persons  of  advancing  years, 
who  before  had  nothing  to  look  forward  to  but  the 
workhouse,  to  make  some  savings  to  supplement  this 
very  small  income.  There  is  some  truth  in  the 
view  that  people  will  make  sacrifices  for  tea  and 
[142] 


PROVISION  FOR  OLD  AGE 

tobacco  that  they  will  not  make  for  bread  and 
meat.  Moreover,  whatever  the  fact  as  regards 
saving  for  old  age,  there  can  be  no  doubt  that  the 
new  policy  will  add  to  the  incomes  of  families  who 
feel  the  care  of  parents  and  grandparents  a  serious, 
even  though  not  unwelcome,  burden.  The  better 
provision  for  children  that  may  result  from  this 
enlargement  of  family  incomes  should  have  a 
favorable  effect  on  the  rising  generation.  Finally, 
this  and  every  other  change  which  makes  for  con- 
fidence and  certainty  on  the  part  of -wage  earners 
should  tend  to  encourage  prudence  and  forethought 
and  to  discourage  recklessness  and  indifference. 

For  these  and  other  reasons,  that  is,  that  the 
number  of  old  persons  in  the  country  cannot  well 
be  increased  by  an  old-age  pension  policy,  that  the 
number  of  the  aged  poor  is  not  likely  to  be  in- 
creased, and  that  the  influence  on  prudence  and 
forethought  is  as  likely  to  prove  favorable  as  un- 
favorable, the  dismal  forebodings  and  head-shak- 
ings which  the  adoption  of  old-age  pension  policies 
by  Australia  and  the  United  Kingdom  has  caused 
in  philanthropic  circles  in  the  United  States,  seem 
to  me  quite  uncalled  for.1 

1  The  Massachusetts  Old-age  Pension  Commission  goes  so 
far  as  to  say  that:  "  A  non-contributory  pension  system  is 

[143] 


SOCIAL  INSURANCE 

Whether  it  will  prove  desirable  in  the  United 
States  at  some  future  time  for  us  to  adopt  an  old- 
age  pension  policy  is  a  question  the  answer  to 
which  must  depend  on  the  direction  taken  by  the 
corporation  pension  systems  that  are  already  so 
common  and  that  seem  destined  to  become  very 
general.  If  corporation  managers  can  be  per- 
suaded to  substitute  for  their  establishment  pen- 
sion plans  systems  that  do  not  interfere  with 
the  mobility  of  labor,  such  full  provision  may 
be  made  through  these  systems  and  through 
special  pension  arrangements  for  public  servants 
of  all  sorts,  college  professors,  etc.,  that  govern- 
mental action,  except  to  provide  for  public  em- 
ployees, will  be  unnecessary.  If,  however,  cor- 
porate pension  plans  continue  to  require  those 
who  benefit  from  them  to  serve  for  long  years 
the  corporate  employer  promising  the  pension, 
this  method  of  providing  for  old  age  will  prove 

simply  a  counsel  of  despair.  If  such  a  scheme  be  defensible  or 
excusable  in  this  country,  then  the  whole  economic  and  social 
system  is  a  failure.  The  adoption  of  such  a  system  would  be  a 
confession  of  its  breakdown."  One  can  only  regret  that  the 
members  of  this  Commission  did  not  visit  progressive  and  pros- 
perous New  Zealand  and  Australia  before  they  committed 
themselves  to  such  extreme  views.  Such  opinions  in  those 
countries,  whose  "economic  and  social  system"  is  funda- 
mentally like  our  own,  would  excite  only  amused  surprise. 

[144] 


PROVISION  FOR  OLD  AGE 

inadequate.  Wage  earners  will  have  little  enthu- 
siasm for  it;  they  will  continue  to  change  from 
employer  to  employer  to  better  their  condition, 
and  a  large,  in  the  aggregate  a  very  large,  number 
will  fail  to  secure  such  pensions  because  they  will 
not  have  complied  with  the  conditions. 

Our  experience  with  national  military  pensions 
has  not  predisposed  us  to  favor  national  pensions 
of  any  description.  Giving  full  weight  to  the 
fact  that  the  number  of  aged  persons  is  strictly 
limited,  there  is  still  danger  that,  if  we  were 
once  embarked  on  the  pplicy  of  granting  annuities 
out  of  the  public  treasury  to  private  citizens, 
pressure  would  be  brought  to  bear  on  Congress 
to  lower  the  age  limit  and  increase  the  annuity,  and 
that  this  might  lead  to  unwise  extensions  of  the 
policy  in  both  directions.  For  these  reasons  it  is 
all  the  more  to  be  hoped  that  those  intrusted  with 
responsibility  for  directing  the  great  corporate 
interests  of  the  country  will  not  only  continue  to 
introduce  such  wise  provisions  for  their  employees 
as  old-age  pensions,  but  will  do  so  on  terms  that 
will  not  interfere  with  the  mobility  of  labor. 


[145] 


CHAPTER  VI 

.     NEXT  STEPS  IN  SOCIAL  ADVANCE 

IN  a  recent  book,1  Mr.  Fielding  Hall,  after  de- 
scribing a  famine  in  Burma,  imagines  the  follow- 
ing colloquy  between  the  civilizations  of  the  West 
and  the  East.  The  West  says:  — 

"You  are  punished  because  you  have  not  energy 
and  knowledge.  You  are  punished  because  you 
are  poor,  because  you  have  not  striven  after  riches, 
have  not  piled  up  wealth.  You  suffer  and  you 
die  because  of  your  own  fault."  .  .  . 

The  East  answers:  "Can  we  bind  the  wind 
or  bring  the  clouds  upon  the  earth;  are  we 
rulers  of  the  rain?" 

"No,"  the  West  concedes,  "but  you  might  save 
so  as  to  prepare  against  that  which  may  come. 
You  ought  to  pile  up  wealth  on  wealth,  and  then 
you  would  not  fear." 

"We  do  not  fear,"  the  East  replies.  "It  is  you 
who  fear.  You  always  live  in  fear.  You  dare  not 

1  The  Inward  Light,  pp.  125-127. 
[146] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

live  from  day  to  day.  You  must  make  piles  of 
wealth  for  fear,  for  fear.  You  always  look  for- 
ward to  a  fear  that  lives  on  your  horizon.  We  do 
not  fear." 

And  continuing:  ''You  are  unhappy;  we  are 
happy.  You  are  always  struggling.  You  think 
you  master  Fate;  you  cannot.  You  pile  up  wealth; 
you  never  can  be  sure  it  will  not  disappear;  you 
cannot  tell  that  with  all  your  skill  you  will  not  die 
to-morrow.  Sometimes  you  succeed;  more  often 
you  must  fail.  You  seem  to  us  to  be  always  try- 
ing to  do  things  that  you  cannot.  .  .  .  And  when 
you  fail,  you  suffer.  So  then  all  your  lives  you  are 
discontented,  you  suffer,  you  are  afraid." 

This  is  a  striking  presentation  of  the  contrasting 
ideals  of  West  and  East.  The  West  is  preoccupied 
with  material  anxieties.  The  East  is  bowed  under 
the  weight  of  a  fatalistic  philosophy.  In  struggling 
to  secure  the  means  to  live,  Western  peoples  too 
often  miss  the  joy  of  living.  In  daring  to  live 
from  day  to  day,  the  Burmese  expose  themselves 
to  the  ravages  of  famine.  Fortunately,  we  are 
not  compelled  to  choose  one  or  the  other  of  these 
ideals.  The  wise  course  is  to  strike  a  balance  be- 
tween them. 

Life  presents  a  material  as  well  as  a  spiritual 
[147] 


SOCIAL  INSURANCE 

problem.  Our  mistake  in  the  United  States,  as 
I  see  it,  is  not  in  trying  to  solve  the  material  prob- 
lem, but  in  believing  that  we  can  solve  it  by  ex- 
clusive reliance  on  individual  actio5?*^Bysodoing 
we  notonly  miss  the  goaTas^regards  large  classes 
of  our  population,  but  we  too  often  forget  that 
wealth  is  a  means,  not  an  end,  and  in  our  pursuit 
of  it  ignore  the  spiritual  problem  altogether. 

Up  to  a  certain  point  it  is  moral  and  com- 
mendable for  each  to  look  after  his  own  interests 
and  the  interests  of  those  dependent  upon  him. 
It  is  a  mistake  to  think  that  self-interest  in  this 
sense  is  synonymous  with  selfishness.  Adam 
Smith's  assertion  that  it  is  usually  by  pursu- 
ing our  own  interests,  with  due  consideration 
for  the  interests  of  others,  that  we  contribute 
most  to  the  common  well-being,  is  still  true  of  the 
ordinary  man  in  the  ordinary  situation.  Self- 
interest  and  devotion  to  the  common  good  are  not 
inconsistent,  but  supplementary  —  just  as  pa- 
triotism and  a  sincere  desire  for  world  peace  and 
world  progress  may  be  supplementary. 

But  along  with  our  individual  interests  which 
can  best  be  cared  for  by  individual  enterprise,  in- 
dustry, and  forethought,  there  are  other  interests 
that  call  for  collective  or  cooperative  action.  It 
[148] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

has  been  the  purpose  of  these  lectures  to  indicate 
what  some  of  these  common  interests  are  and  what 
measures  may  be  taken  to  care  for  them.  In- 
dustrial accidents,  illness,  premature  death,  un- 
employment, and  old  age  are  the  principal  obstacles 
that  oppose  wage  earners  in  their  efforts  to  be 
independent,  self-supporting,  and  progressive.  Pro- 
tection against  these  evils  is  a  common  need. 
All  are  risks  to  which  men  and  women  are  exposed 
but  which  many  never  experience.  As  common 
risks,  the  wise  and  economical  way  to  provide 
against  them  is  through  cooperative  action. 

If  all  wage  earners,  or  even  the  majority,  would 
voluntarily  insure  themselves  against  these  evils 
or  make  savings  sufficient  to  meet  them,  no  social 
problem  would  be  presented.  Such  voluntary 
cooperation  through  fraternal  insurance  associa- 
tions or  commercial  insurance  companies  would 
make  state  action  unnecessary.  But,  unfortu- 
nately, few  wage  earners  have  the  prudence,  the 
forethought,  or,  from  their  point  of  view,  thejncomg^. 
to  pay  for  such  insurance.  Still  fewer  of  them 
accumulate  enough  property  to  protect  themselves 
from  these  dangers.  That  this  has  been  the  case 
in  the  past,  I  think  no  one  will  deny.  But  we  have 
deluded  ourselves  with  the  belief  that  by  extoll- 
[149] 


SOCIAL  INSURANCE 

ing  the  virtue  of  thrift  to  wage  earners  we  should 
finally  persuade  them  to  make  the  provision  for  these 
future  needs  which  is  now  so  conspicuously  lack- 
ing. In  my  opinion,  this  is  a  vain  hope.  Along 
this  road  we  are  making  little  real  progress.  To 
encourage  wage  earners  to  be  more  careful  and 
provident,  we  must  first  of  all  protect  their  stand- 
ards of  living  from  these  risks  to  which  they  are 
now  exposed.  I  By  cooperative  action,  impelled 
when  necessary  by  the  compulsory  authority  of 
the  state,  we  can  give  stability  to  the  incomes  of 
wage  earners  and  oppose  that  downward  pressure 
which  now  so  constantly  recruits  the  army  of 
standardless,  casual  labor.  By  these  means,  and 
by  these  means  only,  in  my  opinion,  can  we  hope 
to  raise  the  whole  mass  of  wage  earners  to  higher 
standards  of  efficiency  and  earnings  and  to  more 
intelligent  appreciation  of  all  of  life's  possibilities. 
This  is  the  underlying  thought  on  which  the  pro- 
posals advanced  in  these  lectures  rest. 

In  summing  up  my  suggestions  this  afternoon 
and  indicating  what  seem  to  me  to  be  the  most 
needed  next  steps  in  social  advance,  I  must  enter 
still  other  controversial  fields.  The  characteristic 
common  to  most  of  the  policies  that  I  have  advo- 
cated is  that  they  call  for  vigorous  governmental 
[  150  ] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

action.  It  is  right  here  that  we  find  the  principal 
source  of  opposition  to  them  in  the  United  States. 
Fair-minded  men,  who  have  made  a  study  of  for- 
eign experience,  cannot  but  admit  that  these  poli- 
cies work  well  abroad.  But  when  it  is  suggested 
that  we  try  them  in  this  country,  objections  are 
at  once  urged.  They  are  said  to  be  unsuited  to  a 
federal  form  of  government;  it  being  forgotten  that 
Germany  and  Australia  have  federal  governments. 
They  are  said  to  be  out  of  harmony  with  our  repub- 
lican institutions;  the  fact  that  France,  New  Zea- 
land, and  Australia  have  republican  institutions 
being  overlooked.  They  are  said  to  call  for  a 
strong  central  government ;  the  quite  erroneous 
implication  being  that  our  government  at  Wash- 
ington, so  far  as  its  powers  go,  is  not  strong  and 
central.  The  truth  is  that  our  distrust  of  them  is 
not  due  to  the  form  of  our  government,  or  even  to 
the  size  of  our  country,  but  to  our  distrust  of  gov- 
ernment itself  —  a  distrust  which  is  partly  inherited 
and  partly  the  result  of  painful  experience.  We 
do  not  wish  our  cities,  our  states,  nor  our  nation  to 
undertake  new  and  difficult  functions,  because  we 
know  that  the  functions  they  now  undertake  are 
too  often  ill  performed. 

The  next  step  toward  introducing  the  program 
[151] 


SOCIAL  INSURANCE 

of  social  reform  which  I  have  outlined  must  be 
political  reform.  At  this  moment,  our  represent- 
atives at  Albany  are  trying  to  determine  whether 
the  corrupt  alliance  between  business  and  politics, 
the  sordid  details  of  which  are  being  revealed  from 
day  to  day,  is  correctly  described  as  bribery  or 
blackmail.  Who  began  it?  If  business  men  first 
approached  legislators  who  were  intent  only  on 
doing  their  duty  by  their  constituents,  and  tempted 
them  by  offers  of  money  or  other  advantages  to  hold 
lip  needed  legislation,  the  offense  was  bribery.  If 
legislators  introduced  bills,  strike  bills,  for  the  pur- 
pose of  compelling  business  men  to  pay  to  have 
them  withdrawn,  it  was  blackmail. 

The  decision  of  this  question  is  no  doubt  impor- 
tant to  the  principal  performers  in  the  drama  that 
is  now  being  enacted,  but  what  most  concerns  the 
people  of  the  state  is  that  either  bribery  or  black- 
mail should  have  been  determining  factors  in 
shaping  legislation.  That  the  laws  of  this  state 
should  have  been  matters  of  bargain  and  sale  is  a 
disgrace  to  the  commonwealth. 

I  may  be  unduly  optimistic,  but  I  believe  that 
the  investigation  that  is  now  going  on  marks  an- 
other milestone  in  the  road  that  our  country  is 
slowly  traveling  toward  honest  and  efficient  gov- 
[152] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

ernment.  The  very  fact  that  a  majority  of  the  £/  /i , 
senators  at  Albany  sincerely  desire  a  thorough 
housecleaning  is  indicative  of  the  change  that  has 
come  over  the  legislature  since  the  most  flagrant  of 
the  offenses  complained  of  were  committed.  And 
the  improved  character  and  intelligence  of  our 
legislators  at  Albany  is  not  a  peculiarity  of  New 
York.  In  every  state,  new  and  better  men  are 
being  attracted  into  public  life.  In  every  com- 
munity, public  opinion  is  forcing  business  men, 
from  very  shame,  to  change  their  attitude  toward 
the  common  government.  From  viewing  it  as  a 
legitimate  means  of  advancing  their  private  in- 
terests, they  are  coming  to  think  of  it  as  the  pro- 
tector and  promoter  of  our  common  welfare.  No 
one  could  claim  that  this  progress  has  been  steady 
or  continuous.  On  the  other  hand,  not  even  the 
most  pessimistic  can  deny  that  each  new  reform 
wave  sets  a  new  standard  of  governmental  effi- 
ciency and  official  honesty,  which  may  be  receded 
from  in  the  reaction  that  usually  follows,  but  that 
is  never  entirely  lost.  I  believe  that  the  fight  for 
honest  and  efficient  government  is  being  won.  f  And 
as  it  is  won,  we  can  safely  impose  on  the  govern- 
ment new  and  difficult  functions.  Political  reform 
will  no  doubt  long  remain  for  us  a  next  step  in 
[153] 


SOCIAL  INSURANCE 

social  advance  —  but  it  has  already  been  suffi- 
ciently achieved  to  make  other  steps  possible. 
The  argument  that  no  new  duties  must  be  intrusted 
to  the  government  because  it  fails  in  the  duties  it 
already  has,  seems  to  me  to  be  no  longer  admis- 
sible. 

Next  to  political  reform  among  the  changes 
necessary  to  the  realization  of  the  program  I  have 
advocated,  I  should  put  industrial  education.  We 
pride  ourselves  on  being  a  practical  people,  and 
there  is  no  doubt  of  our  interest  in  education.  Yet 
our  educational  system  fails  signally  to  prepare 
boys  and  girls  for  the  lives  that  actually  lie  before 
them.  This  is  the  more  regrettable  because  the 
increasing  specialization  of  modern  industry  is  un- 
favorable to  an  all-around  development  for  those 
who  take  part  in  it.  Unless  boys  and  girls  acquire 
some  general  knowledge  of  industrial  processes 
and  their  interrelations,  before  they  become  wage 
earners,  there  is  little  chance  of  their  ever  acquiring 
such  knowledge. 

As  manufacturing  assumes  more  and  more  the 
factory  form,  a  constantly  larger  proportion  of 
wage  earners  become  mere  machine  tenders.  This 
undoubtedly  makes  for  cheap  goods,  but  it  cannot 
be  denied  that  it  makes  also  for  cheap  men  and 
[  154  ] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

women.  The  workers  who  devote  their  days  to 
the  continuous  repetition  of  simple  sets  of  motions 
—  and  this  is  the  lot  of  most  factory  hands  —  tend 
to  become  deadened  in  mind  and  stunted  in  body. 
No  one  can  go  through  a  modern  factory  without 
being  impressed  with  the  fact  that  the  joy  in  work 
of  which  poets  sing  is  largely  absent.  Many  opera- 
tives display  remarkable  quickness,  and  if  the  hours 
are  not  too  long,  are  not  physically  injured  by  their 
tasks.  But,  on  the  other  hand,  the  eagerness  with 
which  the  factory  whistle  is  awaited  and  the 
promptness  with  which  work  is  suspended  the  in- 
stant it  is  heard  are  clear  evidence  that  little 
interest  is  taken  in  the  work  done.  The  justifica- 
tion of  the  factory  system,  and  the  only  justifica- 
tion I  fear,  is  its  efficiency  as  a  means  of  producing 
goods.  To  the  individual  employee,  this  justifi- 
cation must  take  the  form  of  high  earnings  and 
leisure  for  pursuits  outside  of  working  hours  which 
will  preserve  him  from  becoming  the  human  au- 
tomaton which  his  work  tends  to  make  him.  The 
problem  for  the  future  is  to  secure  these  advan- 
tages for  factory  workers,  and  at  the  same  time  to 
develop  to  the  fullest  extent  other  occupations  than 
factory  employments. 

Encouragement  of  arts  and  crafts  is  especially 
[155] 


SOCIAL  INSURANCE 

important  in  the  United  States,  because  there  are 
certain  circumstances  which  cause  manufacturing 
with  us  to  take  too  exclusively  the  factory  form. 
Our  principal  advantage  over  our  foreign  com- 
petitors comes  from  our  wealth  of  natural  resources. 
It  is  raw  materials,  the  products  of  our  extractive 
industries,  that  constitute  our  chief  exports.  Next 
to  these  come  the  cruder  forms  of  manufactures, 
bulky  iron,  steel,  and  copper  products,  coarse  cot- 
ton goods,  flour,  dressed  meats,  canned  foods,  etc., 
which  we  can  produce  more  cheaply  than  our  for- 
eign competitors  because  we  have  cheap  raw  mate- 
rials and  because  we  have  talent  for  organizing 
capital  and  labor  effectively.  A  third  important 
group  of  exports  is  traceable  to  the  inventive  fac- 
ulty, which  seems  to  be  also  an  American  charac- 
teristic. We  export  sewing  machines,  bicycles, 
typewriters,  agricultural  implements,  and  many 
other  things  which  are  in  demand  abroad,  simply 
because  we  have  invented  them  or  improved  them 
a  little  in  advance  of  our  foreign  competitors. 
But,  besides  these  three  classes  of  exports,  there 
are  very  few  things  that  we  can  produce  in  free 
competition  with  foreign  countries.  We  export 
almost  no  goods  that  are  in  demand  abroad  be- 
cause of  the  superiority  of  American  workmanship. 
[156] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

On  the  other  hand,  a  very  large  proportion  of  the 
articles  which  show  superior  workmanship  or  ar- 
tistic excellence,  which  we  use,  we  import,  and  this 
in  spite  of  our  protective  tariff  which  imposes  an 
average  tax  of  50  per  cent  or  more  on  such  articles. 
This  is,  of  course,  no  proof  of  the  inferiority  of  the 
American  workman,  as  has  sometimes  been  argued ; 
it  merely  reflects  the  fact  that,  so  long  as  we  can 
make  such  large  returns  in  our  extractive  indus- 
tries and  in  the  cruder  forms  of  manufacturing, 
it  does  not  pay  us  to  give  much  attention  to  the 
development  of  handicrafts.  But  it  is  no  less 
ominous  for  the  future.  Our  situation  tends  to 
make  us  predominantly  a  nation  of  farmers,  of 
miners,  and  of  factory  hands.  Will  successive 
generations,  devoting  their  lives  to  these  pursuits, 
be  able  to  compete  against  trained  foreign  workers 
as  our  natural  resources  become  exhausted  and  we 
have  to  adjust  ourselves  to  competition  on  more 
equal  terms  with  our  foreign  rivals  ?  The  answer 
to  this  question  seems  to  me  to  depend  on  the 
promptness  with  which  we  appreciate  the  impor- 
tance of  industrial  education  and  the  intelligence 
with  which  we  introduce  such  training  into  our 
public  educational  system. 

Up  to  the  present  time  we  have  done  less  than 
[157] 


SOCIAL  INSURANCE 

any  other  industrially  advanced  country  to  give 
adequate  training  to  our  manual  workers.  In 
consequence,  there  can  be  no  doubt  that  our  skilled 
trades,  such  as  our  building  trades,  are  relatively 
undersupplied  with  competent  workmen,  while 
unskilled,  and  especially  factory  employments,  are 
relatively  oversupplied.  One  has  only  to  compare 
the  wages  paid  in  our  building  trades  with  those 
paid  in  the  same  trades  abroad,  and  the  wages  paid 
in  our  mills  with  what  foreign  mill  hands  earn,  to 
be  convinced  that  this  is  the  case.  Naturally, 
it  has  been  in  the  skilled  trades,  also,  that  labor 
unions  have  had  their  highest  development,  and 
their  desire  to  advance  the  interests  of  their  mem- 
bers has  led  them  to  work  with,  rather  than  against, 
the  forces  tending  to  keep  down  their  number. 
Just  what  forms  industrial  education  should  take, 
when  it  should  begin  in  our  public  schools,  and 
when  it  should  end,  and  how  it  should  be  related 
to  the  industries  themselves,  to  carry  on  which  it 
endeavors  to  train  boys  and  girls,  are  technical 
questions  which  I  shall  not  attempt  to  answer. 
Long  since,  we  appreciated  the  importance  of 
special  training  for  those  who  are  to  take  directing 
positions  in  connection  with  the  world's  work. 
We  developed  agricultural  schools  for  the  sons  of 
[158] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

independent  farmers,  and  they  compare  favorably 
with  those  of  any  country.  We  developed  mining 
and  engineering  schools.  Latterly,  we  have  begun 
to  develop  schools  of  commerce  and  finance  and 
even  schools  of  journalism.  But  all  of  these  are 
for  the  fortunate  "two  per  cent  or  so  of  the  sons 
of  the  republic  who  can  continue  their  education 
after  they  have  left  the  high  schools.  In  our  free 
public  educational  system  we  have,  it  is  true,  broken 
with  the  traditional  notion  that  education  has  to 
do  primarily  with  Hbooks,  by  introducing  the  kin- 
dergarten at  one  end  and  the  manual-training 
high  school  at  the  other,  but  we  have  left  a  wide 
gap  between,  where  manual  training  largely  ceases, 
and  we  have  done  all  too  little  to  relate  manual 
training  to  the  practical  requirements  of  the  work- 
ing life. 

The  objection  that  is  most  commonly  urged 
against  the  introduction  of  industrial  training 
into  the  public  schools  is  that  it  will  make  educa- 
tion more  material.  The  assumption  behind  this 
objection,  that  is,  that  training  hand  and  eye  is 
more  material  than  training  mental  faculties 
through  books,  seems  to  me  quite  unwarranted. 
But  even  if  there  were  truth  in  it,  I  think  indus- 
trial training  that  would  enable  wage  earners  to 
[159] 


SOCIAL  INSURANCE 

command  higher  wages  would  still  be  desirable. 
After  all,  there  is  nothing  that  tends  to  materialize 
and  brutalize  more  than  the  blind  struggle  for 
existence  in  which  those  who  enter  industrial  life 
without  special  training  for  it  are  too  often  involved. 

.When  it  is  remembered  that  sound  industrial 
education  should  not  only  increase  the  earnings 
of  wage  earners,  but  should  develop  higher  stand- 
ards of  workmanship  and  increase  the  pleasure 
to  be  derived  from  work,  the  case  for  it  seems 
conclusive.  Our  public  schools  cannot  remain 
satisfied  with  merely  preparing  boys  and  girls  to 
live  rational,  useful,  and  happy  lives.  They  must 
also  train  them  to  command  the  earnings  with- 
out which  such  lives  are  impossible. 

One  aspect  of  industrial  education  suggests  the 
third  next  step  in  social  advance  which  seems  to 
me  important.  It  should  serve  to  deepen  the  sense 

j)of  social  solidarity  that  binds  different  classes  to- 
gether and  to  quicken  the  appreciation  of  common 
as  distinguished  from  individual  interests.  For, 
as  individualists  like  to  point  out,  our  present 
industrial  system  is  ideally  a  great  system  of 
cooperation.  Each  is  working  for  his  own  interest, 
but  in  so  doing  he  is  also  advancing  the  interests  of 
others.  No  one  can  live  to  himself  alone.  Each 
[160] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

labors  and  produces  for  others,  and  consumes  goods 
which  others  have  produced.  The  trouble  is  that 
this  cooperative  aspect  of  modern  industry  is  little 
understood  by  the  majority  of  those  who  take  part 
in  it. 

Industrial  education,  by  tracing  the  historical 
development  of  different  industries  and  showing 
the  relation  of  different  processes  and  different 
branches  of  production  to  one  another,  should  help 
the  wage  earner  to  understand  his  true  relation 
to  industrial  society.  Monotonous  tasks,  repeated 
hour  after  hour,  would  be  less  irksome  if  the  doer 
of  them  appreciated  that  by  his  work  he  was  help- 
ing to  gratify  the  wants  of  others,  perhaps  in  dis- 
tant lands,  and  that  others  were  at  the  same  time 
doing  monotonous  tasks  in  order  that  his  wants 
might  be  gratified.  The  importance  of  the  serv- 
vice  that  the  employer  performs  would  also  be 
more  clearly  appreciated,  and  there  would  be  more 
chance  of  success  if  the  attempt  should  be  made  to 
dispense  with  the  employer  and  substitute  formal 
cooperation,  directed  by  a  committee  of  workmen 
or  a  hired  manager,  for  the  spontaneous  coopera- 
tion that  results  from  the  division  of  labor  and 
production  for  the  market. 

This  deepening  of  the  sense  of  social  solidarity 
[  161  ] 


SOCIAL  INSURANCE 

and  quickening  of  appreciation  of  our  common 
interests  is  indispensable  to  the  realization  of  any 
program  of  social  reform.  Only  by  a  change  of 
attitude  and  change  of  heart  on  the  part  of  the 
whole  people  can  we  hope  to  curb  our  rampant 
individualism  and  achieve  those  common  ends 
which  we  all  admit  to  be  desirable  but  which  are 
only  attainable  through  our  united  efforts.  As 
soon  as  we  begin  to  think  of  government  as  some- 

ing  more  than  an  agency  for  maintaining  order, 
^as  organized  machinery  fop  advancing  our  com- 
mon interests,  —  we  appreciate  how  far  we  still  are 
from  being  a  truly  civilized  society. 

If  our  social  consciousness  had  advanced  beyond 
the  rudimentary  stage  in  its  development,  many 
questions  which  trouble  us  now  would  almost  solve 
themselves.  Take  such  a  simple,  common  need  as 
that  of  having  clean  streets.  Every  one  will  admit 
the  desirability  of  clean  streets,  and  yet  it  is  the 
exceptional  citizen  who  feels  personal  responsi- 
bility for  keeping  the  streets  clean.  As  individ- 
duals  we  throw  papers  and  other  rubbish  about 
with  reckless  disregard  of  the  consequences,  and 
then  find  fault  with  the  street-cleaning  department 
because  our  streets  do  not  present  the  tidy  appearance 
of  the  Strassen  of  Berlin  or  the  boulevards  of  Paris. 
[162] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

Or  consider  the  perennial  question  of  the  right 
of  the  police  to  secure  exact  means  for  identifying 
persons  who  for  any  reason  come  under  their  sur- 
veillance. The  rational  answer  to  that  question 
is  not  that  the  police  records  should  be  confined 
to  persons  who  have  actually  been  convicted  of 
crime,  but  that  there  should  be  in  some  depart- 
ment a  complete  and  accurate  registry  of  all  per- 
sons in  the  city  which  could  serve  as  a  ready 
means  of  identification,  and  which,  for  example, 
would  protect  respectable  persons  who  fall  ill  on 
the  streets  from  the  risk  and  humiliation  of  being 
arrested  for  drunkenness.  Without  such  means  of 
identification  our  police  are  constantly  making 
stupid  blunders,  arresting  and  even  clubbing  inno- 
cent persons,  and  allowing  criminals  to  escape.  We 
require  automobiles  and  even  dogs  to  be  licensed 
and  registered,  and  yet  wej-emse  to  give  the  police 
department  the  most  obviously  requisite  means 
for  accomplishing  its  work  —  full  and  complete 
information  about  the  persons  whose  lives  and  Jr 
property  it  is  expected  to  protect.  When  we^make 
unfavorable  comparisons  between  our  police  and 
the  police,  for  example,  of  Berlin,  we  must  not  for- 
get this  important  difference. 

The  same  lack  of  appreciation  of  what  our  com- 
[163] 


SOCIAL  INSURANCE 

mon  interests  require  is  shown  in  more  subtle  ways 
in  connection  with  great  public  questions,  such  as, 
whether  Congress  should  have  power  to  impose  an 
income  tax,  whether  trusts  should  be  required  to 
obtain  federal  charters,  or  whether  we  should  have 
a  postal  savings  bank. 

After  holding  in  repeated  decisions  that  Congress 
had  power  to  tax  incomes,  the  Supreme  Court  de- 
cided in  the  nineties  that  such  taxation,  as  applied 
to  personal  incomes,  was  unconstitutional.  Both 
parties  agreed  in  favoring  an  amendment  to  the 
Constitution  which  would  clearly  give  the  federal 
government  this  power.  Such  an  amendment 
was  framed  by  President  Taft's  advisers,  adopted 
by  Congress,  and  submitted  to  the  legislatures  of 
the  different  states.  Several  states  ratified  it,  but 
when  it  reached  New  York,  Governor  Hughes, 
with  whom  I  am  proud  to  agree  on  most  public 
questions,  recommended  its  rejection  by  the 
legislature,  on  the  ground  that  under  it  Congress 
might  tax  incomes  from  state  and  municipal 
bonds,  and  thus  hamper  the  borrowing  powers  of 
subordinate  branches  of  the  government.  This 
objection,  which  is  understandable  as  coming  from 
a  cautious  lawyer,  has  been  accepted  by  the  news- 
papers of  the  country  as  an  utterance  of  wise  and 
[164] 


°~\ 5 

NEXT  STEPS  IN  SOCIAL  ADVANCE 


far-seeing  statesmanship.1!  But  is  it  compatible 
with  a  proper  appreciation  of  the  importance  of  our 
common  interests?  The  Congress  of  the  United 
States  is  not  a  foreign  power  against  which  citizens 
of  New  York  must  be  carefully  protected.  Its 
acts  are  the  acts  of  representatives  from  the  dif- 
ferent states,  as  jealous  of  the  interests  of  their 
localities  as  Governor  Hughes  himself.  Is  it 
probable  that  they  would  approve  a  use  of  this 
taxing  power  that  would  embarrass  the  sub- 
ordinate branches  of  the  government  in  which  they 
are  equally  interested  ?  Or,  if  an  occasion  arose 
when  the  national  interest  seemed  to  require  the 
taxation  of  all  incomes,  from  whatever  source,  is  it 
desirable  or  statesmanlike  to  oppose  our  selfish, 
sectional  interests  to  this  national  need  ?  To  be- 
lieve so  seems  to  me  to  deny  that  we  are  in  a  true 
sense  a  nation  with  common  interests  and  common 
purposes.  It  bespeaks  a  distrust  of  the  repre- 
sentative character  of  Congress,  a  willingness  to 
subordinate  larger  national  interests  to  smaller 
state  and  local  interests,  and  is  another  form,  I 
cannot  but  think,  of  the  exaggerated  individualism 
to  which  I  have  frequently  referred. 

1  The  soundness  of  Governor  Hughes' s  views  as  to  the  scope 
of  the  amendment  has  been  questioned  by  high  authority,  but 
this  does  not  concern  us  here. 

[165] 


SOCIAL  INSURANCE 

The  question  of  requiring  corporations  whose 
business  is  interstate  in  character  to  incorporate 
under  federal  law,  is  of  a  somewhat  different  nature, 
and  yet  the  arguments  against  the  policy  —  so  far 
as  they  are  not  constitutional  —  also  ignore  the 
great  common  interests  at  stake.  Few  will  deny 
that  the  large  corporations  that  we  call  trusts  are 
national  in  the  scope  of  their  operations.  Few  are 
so  ignorant  of  the  facts  as  to  maintain  that  the 
states  can  adequately  control  these  giant  organiza- 
tions as  the  public  interest  requires.  And  yet, 
when  the  issue  is  squarely  presented  of  bringing 
these  corporations  under  the  control  of  the  federal 
government,  an  invasion  of  state's  rights  is  charged, 
and  the  cry  is  raised  that  the  new  policy  will  prove 
subversive  of  local  self-government.  Industrially, 
we  have  become  a  great  unified  nation;  politically, 
we  are  held  back  by  our  inherited  traditions  in 
regard  to  state's  rights,  by  our  distrust  of  govern- 
mental action,  and  by  our  strong  individualistic 
bias. 

The  issue  presented  by  the  bill  creating  a  postal 
savings  bank  now  before  Congress  is  more  inti- 
mately related  to  the  subjects  we  have  considered 
in  this  course.  Undoubtedly,  one  reason  why  wage 
earners  are  not  more  prone  to  save  for  future  needs 
[166] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

is  that  the  facilities  for  safeguarding  their  savings 
in  many  parts  of  the  United  States  are  quite  in- 
adequate. It  is  not  enough  for  those  who  deny 
this  to  show  that  sound  and  well-managed  savings 
banks  are  found  in  our  cities.  Institutions  for 
safeguarding  the  savings  of  wage  earners  must 
not  only  be  sound  but  they  must  command  the 
confidence  of  wage  earners.  Moreover,  only  about 
one  third  of  the  population  of  the  country  lives 
in  cities.  In  small  towns  and  country  districts, 
particularly  in  the  South  and  West,  there  are  no 
savings  banks,  and  it  is  not  unusual  for  wage 
earners  who  are  moving  from  place  to  place  to 
buy  post  office  money  orders  with  their  accumu- 
lations as  on  the  whole  safer  than  hoarding  the 
money  itself.  Every  one  uses  the  post  office  to 
some  extent.  Backed  by  the  credit  of  the  govern- 
ment, a  postal  savings  system  commands  the  con- 
fidence even  of  the  most  timid  and  distrustful. 
Finally,  post  offices  are  to  be  found  everywhere, 
and  it  would  be  comparatively  easy  for  every  post 
office  that  is  now  organized  to  issue  money  orders 
to  extend  its  operations  to  include  receiving  money 
on  deposit.  In  view  of  these  facts  and  of  the 
successful  operation  of  postal  savings  banks  abroad, 
it  would  seem  that  no  fair-minded  person  would 
[167] 


SOCIAL  INSURANCE 

be  found  to  oppose  the  principle  of  this  new  policy, 
however  men  might  differ  as  to  the  best  means  of 
putting  it  into  effect.  And  yet  it  is  well  known 
that  the  change  is  most  actively  opposed  by  the 
very  men  who  might  be  expected  to  render  greatest 
assistance  in  making  it  effective  —  the  bankers  of 
the  country.  Here,  again,  we  have  an  illustration 
of  inherited  prejudices  and  individual  interests 
making  men  blind  to  the  common  interests  of  the 
communities  in  which  they  live. 

These  instances  and  many  others  that  might 
be  cited  all  illustrate  the  same  moral.  The  gospel 
of  love  has  as  yet  influenced  very  little  our  views 
on  public  questions.  In  business  and  in  politics 
we  are  still  individualists.  We  habitually  put  our 
individual  before  our  common  interests,  and  even 
when  we  are  conscious  of  common  needs  we  hesi- 
tate to  intrust  them  to  our  common  government. 
To  correct  these  national  characteristics  is,  in 
my  opinion,  the  most  important  next  step  in  social 
advance.  And  as  we  correct  them,  as  our  sense  of 
social  solidarity  is  deepened,  and  our  appreciation 
of  our  common  interests  quickened,  measures  of 
reform  will  seem  obvious  and  easy  that  now  seem 
visionary  and  impracticable. 

have   presented    political    reform,    industrial 
[1G8] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

education,  and  a  deepening  of  our  social  con- 
sciousness as  needed  next  steps  in  social  advance 
partly  because  they  are  so  desirable  in  themselves, 
but  partly,  also,  because  the  degree  in  which  we 
attain  them  has  an  important  bearing  on  the  policies 
advocated  in  the  preceding  chapters.  What  this 
bearing  is  I  can  best  make  clear  by  now  briefly 
reviewing  these  policies. 

A  vigorous  campaign  of  accident  and  illness 
prevention  and  the  organization  of  a  national 
board  of  health  were  first  advocated.  As  to  acci- 
dent indemnity,  a  system  of  workmen's  compen- 
sation, like  that  of  the  United  Kingdom,  was  urged 
as,  on  the  whole,  best  suited  to  conditions  in  the 
United  States.  Under  it,  employers  are  required 
to  add  the  cost  of  caring  for  the  victims  of  in- 
dustrial accidents  to  their  other  expenses  of  pro- 
duction, and  the  burden  is  thrown  upon  consumers, 
for  whose  benefit  production  is  carried  on. 

Provision  against  illness  offers,  it  was  admitted, 
greater  difficulties.  As  a  first  step,  it  was  suggested 
that  encouragement  should  be  given  to  fraternal 
organizations  and  trade  unions  which  afford  illness 
insurance.  For  illnesses  due  to  well-defined  trade 
diseases,  the  plan  adopted  by  England  in  1906  of 
requiring  employers  to  indemnify  the  victims  of 
[169] 


SOCIAL  INSURANCE 

such  diseases  in  the  same  way  that  they  indemnify 
the  victims  of  accidents  was  advocated.  Finally, 
for  illnesses  not  due  to  trade  diseases,  some  system 
of  compulsory  insurance,  like  that  of  Germany, 
was  urged  as  a  goal  to  be  sought  so  soon  as  public 
opinion  should  be  prepared  for  it. 

Unemployment  also  presents  a  many-sided  prob- 
lem. The  measures  proposed  were:  regulated  pro- 
duction, a  chain  of  employment  bureaus  which 
should  register  the  names  and  qualifications  of  all 
unemployed  persons  in  the  state  and  to  which  em- 
ployers should  apply  whenever  they  require  addi- 
tional hands,  farm  and  industrial  colonies  for 
vagrants,  trade-union  insurance  against  unemploy- 
ment encouraged,  if  not  subsidized,  by  the  govern- 
ment, and  training  schools  for  the  unemployed 
during  periods  of  enforced  idleness,  as  preferable 
to  relief  work. 

The  final  need,  provision  for  old  age,  was  to  be 
met  as  regards  private  employees  by  old-age  pension 
or  annuity  systems  maintained  by  corporations, 
provided  these  could  be  arranged  so  as  not  to 
interfere  unduly  with  the  mobility  of  labor;  by 
retiring  allowances  to  superannuated  public  em- 
ployees; and  by  the  encouragement  of  savings 
bank  and  commercial  insurance  against  old  age. 
[  170  ] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

National  old-age  pensions  were  not  advocated,  as' 
the  need  for  them  in  the  United  States  is  not  yet 
clear,  but  some  of  the  more  common  arguments 
against  them  were  answered. 

In  choosing  between  different  methods  of  dealing 
with  these  evils,  it  was  necessary  in  nearly  every 
instance  to  consider  which  was  "best  suited  to 
conditions  in  the  United  States."  And  the  con- 
ditions referred  to  are  conditions  as  to  govern- 
mental efficiency,  the  spread  of  sound  industrial 
education,  and  the  development  of  a  social  con- 
sciousness. I  advocate  workmen's  compensation 
for  industrial  accidents  on  the  English  model. 
The  Swiss,  after  devoting  long  years  to  a  study  of 
the  problem,  have  just  decided  in  favor  of  compul- 
sory state  insurance  as  preferable.  No  doubt  it  is 
perferable  for  Switzerland.  It  involves,  however, 
the  creation  of  a  state  insurance  department  to 
enter  into  a  difficult  and  largely  untried  field  of 
insurance.  Optimistic  as  I  am  about  our  political 
future,  I  cannot  feel  that  we  are  yet  ripe  for  such 
an  experiment  in  New  York. 

Compulsory  illness  insurance  seems  to  me  the 

only  adequate  solution  of  the  problem  presented 

by  illness.     Germany  has  operated  such  insurance 

for   twenty-seven  years,  with   a  fair   measure   of 

[171] 


SOCIAL  INSURANCE 

success,  and  her  example  has  been  followed  by 
other  countries.  I  cannot  feel,  however,  that  our 
social  consciousness  is  sufficiently  developed  or  our 
government  sufficiently  efficient  in  this  country  to 
make  the  introduction  of  compulsory  illness  insur- 
ance immediately  desirable. 

The  way  to  deal  with  the  problem  of  unemploy- 
ment was  sketched  out  with  confidence  so  far  as 
the  economics  of  the  matter  were  concerned.  As 
to  the  politics  of  the  matter,  there  is  ground  for 
some  misgiving.  Can  our  states  operate  effi- 
ciently the  chains  of  labor  exchanges  through  which 
alone  we  can  organize  properly  the  labor  market  ? 
With  our  small  proportion  of  intelligent  and  trained 
artisans  in  a  population  made  up  so  largely  of 
farm  workers,  miners,  and  factory  hands,  will  trade- 
union  insurance  against  unemployment  benefit  any 
considerable  number?  Finally,  can  we  seriously 
contemplate  undertaking  the  industrial  education 
of  the  unemployed,  when  we  have  as  yet  taken  only 
the  first  timid  steps  in  the  direction  of  the  indus- 
trial training  of  the  youth  of  the  land  ? 

Political  reform  and  industrial  education   have 

important  relations  with  the  problems  presented 

by  accidents,  illness,  and  unemployment.  The  degree 

to  which  the  social  consciousness  of  a  community, 

[172] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

its  sense  of  social  solidarity,  and  appreciation  of 
common  interests  are  developed  is  the  determining 
factor  in  connection  with  the  problem  of  providing 
for  old  age.  If  we  were  truly  imbued  with  the 
feeling  that  we  are  brothers  working  in  a  common 
vineyard,  if  we  thought  of  the  government  as  or- 
ganized machinery  for  caring  for  our  common  in- 
terests, nothing  would  seem  more  natural  and 
proper  than  that  the  government  should  pay  pen- 
sions to  those  who  in  the  active  period  of  their  lives 
have,  in  the  language  of  the  New  Zealand  act, 
"helped  to  bear  the  burden  of  the  Commonwealth 
by  the  payment  of  taxes  and  by  opening  up  its 
resources  by  their  labor  and  skill."  Such  pensions 
could  not  fairly  be  called  non-contributory.  As 
Lloyd  George  pointed  out  in  defending  his  old-age 
pension  bill  before  the  House  of  Commons:  "As 
long  as  you  have  taxes  upon  commodities  which 
are  consumed  practically  by  every  family  in  the 
country,  there  is  no  such  thing  as  a  non-contrib- 
utory scheme.  If  you  tax  tea  and  coffee,  and 
partly  sugar,  beer,  and  tobacco,  you  hit  everybody 
one  way  or  another.  Indeed,  when  a  scheme  is 
financed  from  public  funds,  it  is  just  as  much  a  con- 
tributory scheme  as  one  financed  directly  by  means 
of  contributions  arranged  on  the  German  or  any 
[173] 


SOCIAL  INSURANCE 

other  basis."  This  is  perfectly  true  if  the  social 
consciousness  of  the  people  under  consideration  is 
so  developed  as  to  lead  them  to  view  taxes  as  fairly 
apportioned  contributions  to  a  common  fund  to 
be  used  for  the  common  benefit.  If,  on  the  other 
hand,  taxes  are  looked  upon  as  forced  levies  ex- 
acted by  an  alien  power,  —  and  this  I  fear  more 
nearly  describes  the  common  view  of  federal  taxes 
in  the  United  States,  —  it  is  not  true.  The  whole 
issue  turns  on  the  state  of  the  public  mind.  In  a 
Country  where  the  sense  of  social  solidarity  is 
strong,  gratuitous  old-age  pensions  may  be  just  and 
wise.  In  another  country,  in  which  individualis- 
tic conceptions  dominate,  they  may  appear  as  a 
device  for  compelling  the  prudent  and  thrifty  to 
support  the  careless  and  improvident,  and  the 
jealousy  and  hatred  which  they  engender  may 
more  than  offset  any  benefits  they  can  confer  by 
relieving  old-age  poverty. 

The  thought  suggested  by  these  considerations 
may  appropriately  conclude  this  discussion  of 
needed  social  reforms.  There  are  no  hard  and 
fast  answers  to  the  social  problems  that  have  been 
touched  on  in  these  chapters.  Solutions  that 
would  be  true  and  wise  in  one  time  and  place 
would  be  quite  unworkable  in  others.  On  the 
[174] 


NEXT  STEPS  IN  SOCIAL  ADVANCE 

n 
whole,  however,  these  United  States  are  progress-  . 

ing.  Government  is  becoming  more  efficient,  we 
are  growing  more  social,  our  absorption  in  our  in- 
dividual interests  is  giving  way  to  deep  and  in- 
telligent appreciation  of  our  common  interests. 
Under  these  circumstances,  policies  that  a  short  time 
ago  would  have  been  quite  unsuited  to  our  conditions 
come  each  year  within  the  range  of  practical  poli- 
tics. I  am  sufficiently  optimistic  to  think  that  this 
progress  is  going  to  continue,  and  that  any  social 
policy  that  is  sound  and  wise  for  a  people  suffi- 
ciently developed  to  make  use  of  it  will  one  day  be 
sound  and  wise  for  the  United  States.  Let  us  not 
be  frightened  by  phrases,  by  the  bugaboo  of  "de- 
stroying local  self-government,"  of  "projecting  the 
United  States  into  the  banking  business,"  of 
"undermining  individual  thrift,"  or  of  "social- 
ism." With  open  minds,  let  us  rather  examine  each 
new  proposal  on  its  merits.  This  is  the  truly 
scientific  attitude  toward  a  field  of  phenomena 
where  all  is  change  and  development.  It  is  also 
the  attitude  which  will  contribute  most  to  that 
betterment  of  social  conditions  which  is  the  purpose 
of  every  program  of  social  reform. 


[175] 


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